AI startup Perplexity AI in funding talks to more than double its valuation to $8 billion

Perplexity has begun fundraising talks, aiming to more than double its valuation to over $8 billion, the Wall Street Journal said in an exclusive report on Sunday.

Sources told the Journal that Perplexity AI is looking to secure around $500 million in this new funding round, as startups look to capitalize on the momentum following OpenAI’s recent major investment.

“Search-based chatbot seeks to raise about $500 million in what would be its fourth funding round in a year,” the Journal reported.

The AI company has already gone through three funding rounds in just the past year—an unusually rapid pace, even for Silicon Valley. Back in January, Perplexity was valued at $520 million. By this summer, its valuation had skyrocketed to $3 billion.

The Nvidia-back Perplexity AI is currently bringing in about $50 million in annualized revenue, based on recent sales, the report added.

This news comes just a week after Perplexity AI received a “cease and desist” notice from the New York Times. The newspaper demanded that Perplexity stop using its content for generative AI purposes.

Perplexity has faced similar challenges in the past, with accusations from media outlets like Forbes and Wired for using their content without permission. In response, the company has since rolled out a revenue-sharing program to address these concerns with publishers.

Perplexity’s search tool provides users with instant answers to their questions, complete with sources and citations. It’s powered by a range of large language models (LLMs), including OpenAI’s and Meta’s open-source model, Llama.

Since the rise of ChatGPT, publishers have been increasingly vocal about chatbots pulling information from various sources to create summaries. Perplexity AI isn’t alone in facing scrutiny—The New York Times is also in a legal dispute with OpenAI over claims of unauthorized use of its articles for training.

Some media organizations, like The Atlantic and Vox Media, have chosen to work with OpenAI through content licensing deals, allowing controlled access to their material for AI applications.

Founded in 2022 by Aravind Srinivas, Andy Konwinski, Denis Yarats, and Johnny Ho, Perplexity AI is an AI-driven search engine designed to provide direct answers to user queries. Based in San Francisco, the startup is taking on major players like OpenAI’s ChatGPT and Google’s Bard, with a focus on creating a user-friendly, AI-powered search experience. Its recent release of an iOS app highlights the company’s push to serve a growing mobile audience.