Perplexity AI raises $73.6 million in funding from Nvidia and Bezos; now valued at $520 million

Artificial intelligence startup Perplexity AI has raised $73.6 million in a Series B funding round from a group of new investors including U.S. chip designer Nvidia and Amazon founder Jeff Bezos (through Bezos Expeditions Fund).

The round, which values the AI startup at $520 million, was led by Institutional Venture Partners, the San Francisco, California-based company said on Thursday. Other backers in this round include Seed and Series A investors NEA, Elad Gil, Nat Friedman, Databricks, Tobi Lutke, Bessemer Venture Partners, Naval Ravikant, Balaji Srinivasan, Guillermo Rauch, Austen Allred, Factorial Funds, and Kindred Ventures, among others.

Perplexity AI  said it will use the fresh capital infusion to accelerate customer adoption and global expansion. Perplexity AI has now raised a total of $100 million in funding to date.

We covered Perplexity AI back in October when the AI search startup specializing in a conversational search engine powered by artificial intelligence, secured new funding led by venture capital firm IVP at a $500 million valuation. The company also raised $25.6 million in March last year in a round led by New Enterprise Associates.

Since publicly launching its first functional conversational answer engine a year ago, the Perplexity AI user base has expanded to 10 million monthly active users, with over half a billion queries answered in 2023 alone. Our mobile apps, available on both iOS and Android, have been installed by more than a million people. Despite these achievements, our goal is to cater to the insatiable curiosity of the entire planet, and we’re only at the beginning of our journey.

To support our rapid consumer adoption and expansion plans, we’ve raised $73.6 million in Series B funding from trusted VC firms and prominent tech visionaries. IVP led the round with continued support from our Seed and Series A investors NEA, Elad Gil, Nat Friedman, and Databricks, as well as new investors NVIDIA, Jeff Bezos (through Bezos Expeditions Fund), Tobi Lutke, Bessemer Venture Partners, Naval Ravikant, Balaji Srinivasan, Guillermo Rauch, Austen Allred, Factorial Funds, and Kindred Ventures, among others. Building upon our Series A earlier this year, we’ve now raised $100 million to date.

In a blog post, Perplexity co-founder and CEO Aravind Srinivas said, “We’ve served more than half a billion queries in 2023, which is about 50% of Microsoft Bing Chat.”

“Perplexity is intensely building a product capable of bringing the power of AI to billions. The team possesses the unique ability to uphold a grand, long-term vision while shipping product relentlessly, requirements to tackle a problem as important and fundamental as search.” — Cack Wilhelm, General Partner, IVP, who led the round, and joins Perplexity’s Board of Directors.

“While there has been a lot of excitement around business-to-business and developer-related AI capabilities, AI will also transform how we access information. Perplexity is at the forefront of this shift as one of the few consumer AI products to reach this major milestone of 10 million MAUs. They will become the go-to place for trusted information, which is why I am so excited that Perplexity is NVIDIA’s first consumer investment from our corporate arm.” – Jonathan Cohen, VP of Applied Research at NVIDIA.

Perplexity is part of a growing wave of generative AI startups that have been thriving amidst the substantial influx of capital into the AI industry. Perplexity aims to leverage artificial intelligence to challenge Google’s dominance in online search. Notably, among Perplexity’s investors are a notable number of Google’s own AI researchers.

The San Francisco-based Perplexity is the developer of an AI-powered search engine competing with the likes of OpenAI’s ChatGPT and Google’s Bard. According to recent reports, Perplexity has been generating annual recurring revenue of $3 million as of this month.

This implies a remarkable valuation multiple of approximately 150 times ARR, a substantial figure for a company with early traction. Nonetheless, this aligns with the valuations achieved by other generative AI-related startups that have recently secured funding, such as model developer Anthropic and AI model repository Hugging Face.

Unlike Google and Bing, Perplexity presents a novel search model that allows users to input straightforward queries on its website. For instance, an example query is: “Why can’t we digest grass?” In response, Perplexity generates concise answers using its AI systems. Simultaneously with the funding round, the company unveiled an iOS app on Tuesday. This move was prompted by the discovery that the majority of its traffic originates from mobile devices.

IVP is not the sole investor in Perplexity; the startup boasts an impressive lineup of backers. This includes renowned figures like Yann LeCun, the chief AI scientist at Meta Platforms, as well as six present and former AI researchers at Google and its sibling company, DeepMind. Among them is Jeff Dean, Google’s Senior Vice President for Research and AI, who served as an angel investor during the company’s early stages. These impressive connections are partly attributed to Perplexity’s CEO, Aravind Srinivas, who previously conducted research at DeepMind and the Google Brain research team before founding the company.

Founded in 2022 by Aravind Srinivas, Andy Konwinski, Denis Yarats, and Johnny Ho, Perplexity’s AI-powered conversational search engine assists users in delivering responses to questions through language models. Just like other generative AI startups that have constructed AI wrappers atop existing large language models (LLMs) like ChatGPT, Perplexity harnesses the capabilities of large language models, specifically drawing upon OpenAI’s GPT technology. This foundation empowers Perplexity AI to comprehend and generate text in a human-like manner.