AI search platform Perplexity is reportedly seeking $500 million in a new funding round that could push its valuation to $8 billion. The potential fourth round of funding within a year signals growing investor confidence in the company’s rapid rise in the AI sector.
Sources familiar with the matter told The Wall Street Journal that the valuation could more than double from its $3 billion standing earlier this year, amid intense interest from venture capitalists eager to capitalize on AI’s accelerating market momentum.
The funding discussions come at a time when AI-related investments are at an all-time high, following OpenAI’s record $6.6 billion funding round that boosted its valuation to $157 billion. Perplexity’s reported aim for an $8 billion valuation reflects the wider AI industry’s trend of exponential growth. However, there’s still uncertainty surrounding the final terms of the funding, and investors remain cautious as concerns about AI market bubbles persist.
Expanding Features with Internal Knowledge Search and Spaces
In tandem with these funding efforts, Perplexity has rolled out new features designed to bolster its appeal to enterprise customers. One key update is the introduction of Internal Knowledge Search, which allows users to simultaneously search both internal documents and public web data.
Internal Knowledge Search feature supports various file formats, including PDFs and Excel sheets, and integrates internal and external content into a single search interface, streamlining workflows for users in industries like finance and business development.
Alongside this, the company has launched Spaces, a collaboration tool that provides teams with a centralized hub for managing documents and sharing files. Unlike typical cloud storage solutions, Spaces offers customization through AI integration, enabling users to tailor search behaviors to specific team needs.
Enterprise Pro accounts benefit from enhanced security features, ensuring sensitive internal files are excluded from AI model training, addressing privacy concerns often raised by businesses handling confidential information.
Whoa! This would be Perplexity’s fourth raise of the year.
It was reportedly valued at $520M in January, then $3B this summer, and now up to $8B.
Forward 12-month revenue per the article is ~$50M, up 5x from March when it was ~$10M.
An $8B valuation is a cool 160x multiple… pic.twitter.com/oTesZSGJcl
— Chase (@itsmechase) October 20, 2024
Revenue Growth and Business Model Evolution
Perplexity’s recent updates are part of a broader strategy to diversify revenue streams and increase its market share. The company’s annualized revenue has surged to $50 million, up from just $10 million in March, driven by premium subscriptions for both individual and enterprise users.
In addition to these paid plans, Perplexity is preparing to introduce advertising on its platform, which could open up new revenue opportunities in the highly competitive digital ad market. Perplexity’s hybrid search model, which combines AI chatbot functionality with web search capabilities, continues to differentiate it from traditional search engines like Google. In fact, Perplexity is one of the platforms that is challenging Google’s traditional dominance over search.
Artificial intelligence is revolutionizing the search landscape, transitioning from conventional search result pages to AI-generated summaries and direct answers. Google is actively pursuing this avenue too by conducting experiments with ads integrated into AI-powered summaries on mobile searches within the United States.
Legal Challenges Over Content Use
Despite its rapid growth and innovation, Perplexity has faced legal pushback from several major media outlets over the use of their content in AI-generated search results. The New York Times recently issued a cease-and-desist letter to the company, accusing it of scraping content without authorization.
Major media outlets such as Forbes and Wired have accused the company of replicating their articles. There have also been accusations of broader plagiarism by various outlets. Forbes spotted a duplicated piece from its website on Perplexity, identified only by a small “F” icon.
Perplexity has attempted to mitigate these concerns by adjusting its content usage practices. The company has introduced a revenue-sharing program for publishers whose content contributes to search results that generate advertising revenue. It also offers participating publishers a free subscription to its premium services, in an effort to foster cooperation rather than conflict with media outlets.
Last Updated on November 7, 2024 2:26 pm CET