Perplexity AI Raises $50 Million in Funding from IVP: How will they use it?

Updated on January 8 2024
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Perplexity AI is again in the limelight after raising $50 Million from IVP, a leading venture capital firm. According to reports by The Information, in a recent post, reported that the valuation of the one-year-old company has soared to approximately $500 million, encompassing the infusion of fresh capital. This marks a substantial increase from the post-investment valuation of $150 million reported in earlier in March.

Perplexity AI is a startup which is currently working on a new type of search engine called an “answer engine.” Answer engines are different from traditional search engines in that they are designed to provide direct answers to users’ questions, rather than simply returning a list of links. Perplexity AI uses large language models (LLMs) to generate these answers, which are then curated by a team of human experts. 

Perplexity AI’s approach towards use of investments comprises the below-mentioned aspects: 

  • To become the go-to search engine for everyone
  • To make information more accessible to everyone
  • To build a new generation of AI products and services
  • To help AI reach its full potential

Key Takeaways

  • Perplexity AI and its previous and current valuation 
  • Reason for Perplexity AI to raise funding at $500 Mn valuation from IVP
  • What is Perplexity AI, and how is it different from other AIs?

If you are interested in knowing about Perplexity AI’s strategy after funding, you might be interested in checking out why Amazon invested in Anthropic, the company behind Claude AI.

Perplexity AI Raises $50 Million Funding from IVP

Perplexity AI, a startup behind an advanced search engine powered by generative language models, has raised a funding of $50 Million in a round led by Institutional Venture Partners (IVP). This new investment values the company at approximately $500 million, a significant leap from its post-investment valuation of $150 million just eight months ago.

Currently, Perplexity AI is raking in $3 million in annual recurring revenue (ARR). This means the company is valued at about 150 times its ARR, a high valuation that underscores the enthusiasm surrounding its groundbreaking technology.

Despite being in its early stages, Perplexity AI’s $3 million ARR suggests a strong demand for its product. The influx of $500 million in funding will propel the company’s development, expanding its reach to a broader user base. Table below provides a detailed highlights of the major fundings received by Perplexity AI: 

Date of AnnouncementTransaction Name Number of InvestorsMoney Raised Lead Investors 
24th October 2023Pre Speed Round – Perplexity AI2IVP
28th May 2023 Series A – Perplexity AI9$25.6MNew Enterprise Associates 
1st September 2023Speed Round – Perplexity AI9$3.1MElad Gill

Perplexity’s Previous Valuation

Back in March 2023, Perplexity AI was valued at $150 million. This recent funding round represents an impressive 233% increase in the company’s valuation in less than a year, highlighting the substantial confidence and support it has garnered.

Perplexity AI’s search engine stands out by employing large language models to directly answer user questions, different from that of traditional search engine model of presenting a list of links. This user-centric approach aims to enhance the result quality and friendliness of the search experience.

IVP, the driving force behind this funding round, is a venture capital firm known for backing early-stage and growth-stage technology companies. With a successful history of investments in major players like Netflix, Dropbox, and Snap, IVP’s involvement adds a noteworthy dimension to Perplexity AI’s journey.

Perplexity AI’s achievement is indicative of the rising interest in generative language models (LLMs). These AI systems have the potential to reshape various industries, including search, education, and customer service. The substantial funding signals investors’ confidence in the future of LLMs and positions Perplexity AI as a potential industry leader.

In essence, Perplexity AI’s $500 million funding round signifies a positive outlook for both the company and the broader LLM industry, emphasizing investors’ optimism about the potential impact of these innovative language models.

Why Perplexity AI Raised Millions in Funding from IVP?

Perplexity AI’s recent funding from IVP is strategically aligned with its long-term vision. The company aims to evolve its search engine, expand its global footprint, compete with industry leaders, attract top talent, and establish a prominent brand presence—all contributing to its mission of making information more accessible and advancing the potential of artificial intelligence. Mentioned below are the reasons why Perplexity AI raised Millions from IVP: 

Accelerate Product Development

Perplexity AI, in its early stages, aims to expedite the enhancement of its search engine.

Priorities include improving answer engine accuracy, expanding language support, and ensuring accessibility for individuals with disabilities.

Expand into New Markets

Currently limited to the United States, the funding facilitates Perplexity AI’s expansion into untapped markets, such as Europe and Asia.

This strategic move aims to broaden the user base and transform Perplexity AI into a globally recognized entity.

Compete with Leading LLM – Powered Search Engines

The influx of funds positions Perplexity AI to compete with industry giants like Google AI and OpenAI.

Ongoing innovation, the development of new features, and enhanced capabilities are crucial for securing a leading position in the LLM – powered search engine space.

Attract and Retain Top Talent

Recognizing the importance of skilled professionals, Perplexity AI plans to utilize the funding to offer competitive salaries and benefits.

By attracting and retaining top talent, the company aims to stay at the forefront of the rapidly evolving LLM market.

Build Brand and Awareness

Acknowledging its current status as a relatively unknown entity, Perplexity AI plans to invest in marketing, advertising, and public relations activities.

The goal is to raise awareness among potential users and investors, ultimately solidifying Perplexity AI’s position in the competitive LLM market.

Also Check: Evolution of AI Audio Generation and How it Works?

What is Perplexity AI, and How is it different from Other AIs?

Perplexity AI is a company specializing in the development of large language models (LLMs), also referred to as generative pre-trained transformer models (GPTs). These LLMs, a form of artificial intelligence, possess the capability to produce text, facilitate language translation, create diverse creative content, and provide informative responses to queries. Perplexity AI’s LLMs undergo extensive training on vast datasets containing text and code, enabling them to generate text that closely resembles human-written content. 

Perplexity AI - Achievements in 2023
Perplexity AI – Achievements in 2023

How is Perplexity AI different from Other AI Sources? 

Perplexity AI is a pioneering startup that has ventured into the realm of artificial intelligence, specifically focusing on the development of a unique search engine known as an “answer engine.” What sets Perplexity AI apart from other AIs is its distinctive approach to information retrieval. Below are the points of distinction from other AIs: 

ParameterPerplexity AI’s ApproachKey Points
Focused Approach on LLMsDifferencePerplexity AI distinguishes itself through a concentrated focus on developing and commercializing LLMs.
SignificanceLLMs represent a rapidly evolving AI field, holding transformative potential in diverse industries, including search, education, and customer service.
Open-Source PhilosophyDifferenceIn contrast to many AI companies maintaining proprietary technology, Perplexity AI adopts an open-source approach.
SignificanceThis choice enables free utilization and modification of Perplexity AI’s LLMs by other entities, fostering collaboration and accelerating LLM technology development.
Collaboration with AcademiaDifferencePerplexity AI stands out by actively engaging in collaborations with academic institutions, distinguishing itself from companies predominantly focused on commercial applications.
SignificanceThe collaboration ensures a continuous awareness of the latest LLM research trends, while extending accessibility of Perplexity AI’s technology to academic researchers, nurturing mutual growth.

What are the Key Features of Perplexity AI? 

With 67 years of AI evolving and adapting to market trends, the current market offers individuals and organizations to choose from a wide range of AI options. What sets Perplexity AI apart and why one might consider opting it has been explained below: 

  • Large Language Models (LLMs): Perplexity AI specializes in the development of advanced LLMs, also known as generative pre-trained transformer models (GPTs).
  • Versatility in AI Applications: The LLMs crafted by Perplexity AI exhibit diverse capabilities, including text generation, language translation, creative content creation, and informative question answering.
  • Extensive Training Datasets: Perplexity AI’s LLMs undergo training on massive datasets comprising both text and code, ensuring a robust foundation for generating human-like text.
  • Human-Curated Responses: The generated content goes through a curation process by a team of human experts, enhancing accuracy and reliability.
  • Open-Source Philosophy: Perplexity AI differentiates itself by adopting an open-source approach, allowing free utilization and modification of its LLMs by other companies and researchers.
  • Collaboration with Academia: Actively engaging with academic institutions sets Perplexity AI apart, facilitating ongoing collaboration and mutual growth in LLM research.

Also Check: Top AI Content Writers in 2023

Long Term Goals and Implications of Perplexity AI

In its visionary pursuit, Perplexity AI has outlined ambitious long-term goals, each aimed at reshaping the landscape of artificial intelligence and its applications. Perplexity AI’s commitment to open-sourcing its technology and fostering collaboration with academia underscores its dedication to leading a transformative revolution. The long-term implications span across industries, heralding a future where LLMs play a pivotal role in reshaping how we search for information, educate, provide customer service, and even engage in creative pursuits. Long term implications of Perplexity AI across industries can be highlighted as: 

  • Revolutionizing Search: Perplexity AI’s LLMs are poised to redefine search engines, offering more informative and user-friendly experiences by directly answering user queries.
  • Transforming Education: LLMs hold the potential to revolutionize education, facilitating the development of personalized learning tools and interactive educational experiences to enhance student learning.
  • Elevating Customer Service: Perplexity AI’s LLMs can contribute to more efficient and effective customer service tools, including chatbots and virtual assistants that provide valuable support to customers.
  • Innovating Art and Entertainment: LLMs open avenues for creating novel forms of art and entertainment, from generating music and scripts to crafting interactive video games.

Winding Up!

In conclusion, Perplexity AI emerges as a groundbreaking force in the AI landscape, securing a significant funding milestone and positioning itself as a leader in the LLM community. Its commitment to innovation, open collaboration, and ambitious long-term goals, coupled with the potential implications across diverse industries, reflects a promising future for Perplexity AI and the transformative power of large language models. It is yet to be seen how the funds are utilized and what are the developments that we will witness in terms of AI.

FAQs

Ques. Who invested in Perplexity AI?
Ans: Venture capital firm Institutional Venture Partners (IVP) led the investment in Perplexity AI, along with other investors such as Yann LeCun, the chief AI scientist at Meta Platforms, and six present and former AI researchers at Google and its sibling company, DeepMind. 

Ques. How much funding did Perplexity AI raise?
Ans: Perplexity AI raised $500 million in funding, which is a significant increase from the $150 million post-investment valuation in March 2023.

Ques. What is the revenue of Perplexity AI?
Ans: Perplexity AI has been generating $3 million in annual recurring revenue as of October 2023.

Ques. What is the future of Perplexity AI?
Ans: Perplexity AI’s latest funding round indicates a strong vote of confidence in its potential to disrupt the internet search landscape. Its transformative approach has the potential to redefine the search experience and empower individuals to interact with the internet more intuitively and efficiently.

Ques. How has Perplexity’s valuation changed over time?
Ans: Timeline below highlights change in Perplexity’s valuation with time:

  • In March 2023, Perplexity AI had a post-investment valuation of $150 millio
  • In October 2023, Perplexity AI raised $500 million in funding, which valued the company at $500 million
  • This represents a significant increase from the previous post-investment valuation of $150 million

Therefore, Perplexity AI’s valuation has increased by $350 million from March 2023 to October 2023.

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