AI search startup Perplexity aims for $8B valuation in new round: WSJ

Artificial intelligence search startup Perplexity AI has begun fundraising talks in which it is looking to more than double its valuation to $8 billion or more, the Wall Street Journal reported Sunday.

The Nvidia (NASDAQ:NVDA)-backed startup has told investors that it is looking to raise about $500 million in the latest funding round, the report said, citing people familiar with the matter.

Perplexity declined to comment.

Perplexity has ambitions to chip away at Google’s (GOOG)(GOOGL) dominance in the search arena, utilizing generative AI to answer queries.

The startup does not have its own AI model, and instead uses a combination of existing large language models ((LLMs)), such as OpenAI’s ChatGPT, Meta’s (META) Llama and builds upon them.

The Jeff Bezos-backed company has started shifting its business model from a subscription basis to advertising, which is more in line with how Google Search generates revenue.

Perplexity’s search engine reportedly answered about 250 million questions in July, compared to 500 million throughout the entirety of 2023.

The AI startup’s estimated annualized revenue based on recent sales is currently about $50 million, the Wall Street Journal added.

The company has raised three rounds of funding in the past year, with its valuation jumping from $1 billion to $3 billion after its last funding round in May, which saw SoftBank Group’s Vision Fund 2 invest in the firm.

Earlier this week, Perplexity received a “cease and desist” notice from The New York Times (NYT) demanding the company stop using its content.