As dominant players in the search engine industry, particularly Google, enhance their platforms with cutting-edge AI technology, emerging companies are striving to revolutionize AI-driven search from the ground up. While challenging established giants with vast user bases may appear daunting, these innovative startups believe they can carve out a niche by offering a superior user experience.
One such player in this landscape is Perplexity AI, which recently announced a significant milestone, securing a $70 million funding round led by IVP, with additional investments from National, Databricks Ventures, prominent tech figures like former Twitter VP Elad Gil, Shopify CEO Tobi Lutke, ex-GitHub CEO Nat Friedman, and Vercel creator Guillermo Rauch. Notable contributors to this funding round also include Nvidia and the notable presence of Jeff Bezos.
Insiders familiar with the deal revealed to Wired that the latest funding round values Perplexity at $520 million post-money. This valuation may seem modest in the realm of general AI enterprises, considering Perplexity’s relatively recent establishment in August 2022, but it signifies a remarkable stride for the company.
Founded by a team of experts comprising Aravind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski, each bringing expertise in AI, distributed systems, search engines, and directories, Perplexity sets itself apart by offering a chatbot-like interface that enables users to pose queries in natural language. This innovative approach allows users to receive comprehensive responses with sourced quotations, primarily sourced from blogs and articles, empowering users to delve deeper by asking follow-up questions.
Perplexity’s foundation lies in a suite of proprietary general AI models developed internally and in collaboration with external partners. Subscribers to Perplexity’s Pro plan, priced at $20 per month, gain access to a range of AI models, including Google’s Gemini, Mistra 7Bl, Anthropic’s Claude 2.1, and OpenAI’s GPT-4. This subscription unlocks features such as image generation, personalized search assistance through Perplexity’s Copilot, and the ability to upload documents for analysis, enabling users to extract insights efficiently.
While drawing parallels to established AI tools like Google’s Bard, Microsoft’s Copilot, and ChatGPT is inevitable, Perplexity distinguishes itself with a user-friendly chat interface reminiscent of contemporary AI interfaces. Additionally, competing with platforms like You.com, Perplexity boasts robust search filtering and discovery functionalities, offering users the flexibility to explore trending topics or focus their searches on scientific literature.
However, the sustainability of general AI search tools raises valid concerns, especially considering the substantial operational costs associated with maintaining AI models. Despite generating an estimated \(5 million to \)10 million in annual recurring revenue, Perplexity’s financial viability remains under scrutiny due to the significant expenses tied to training and operating AI models.
As the AI landscape evolves, ethical considerations surrounding AI misuse, misinformation, and intellectual property rights surface. Perplexity, like its counterparts, grapples with challenges related to data scraping, bias mitigation, and potential legal disputes over content usage. Moreover, the absence of consumer protection policies against internet claims poses a potential risk to users, highlighting the need for robust safeguards in the AI ecosystem.
Despite these challenges, investors remain optimistic about Perplexity’s trajectory, with the startup raising over $100 million to date to fuel its expansion and product development efforts. With a focus on enhancing user experience and advancing AI capabilities, Perplexity aims to redefine the search paradigm and empower users with efficient information retrieval tools.
In the words of IVP general partner Cack Wilhelm, “Perplexity is on a mission to democratize AI-powered search and empower billions of users worldwide. Aravind’s visionary leadership and relentless pursuit of innovation position Perplexity to address the critical challenges in the search domain.”
