Perplexity AI Secures $74M Funding to Challenge Google and Microsoft Bing with Innovative AI-Driven Search Solutions

Today, California-based Perplexity AI, a startup focused on revolutionizing knowledge discovery through an AI-native search engine, announced it has raised $73.6 million in a Series B funding round.

This investment was led by IVP, with notable participation from NEA, Databricks, Nvidia, Bessemer Venture Partners, and Kindred Ventures. Tech visionaries including Amazon founder Jeff Bezos, former X VP Elad Gil, GitHub CEO Nat Friedman, Shopify CEO Tobi Lutke, and Vercel founder Guillermo Rauch also joined the funding effort.

With this latest round, Perplexity has raised a total of $100 million, achieving an estimated valuation of over $500 million. The startup plans to leverage the new capital to enhance its AI-driven search engine and challenge tech giants Google and Microsoft in the era of generative AI and large language models (LLMs).

What sets Perplexity AI apart?

While Google and Microsoft have been dominant players in the search engine space for years, Perplexity aims to compete by delivering a superior, AI-native experience. Its knowledge search platform merges web indexes with advanced AI models to provide immediate answers to user inquiries, facilitating a conversational interface that eliminates the need to navigate through multiple links, ads, or sponsored content.

Additionally, Perplexity enhances user experience by allowing access to detailed information, including relevant sources and citations alongside search results.

"In an era where misinformation and AI hallucinations raise significant concerns, we prioritize accuracy and transparency as foundational to our AI-powered search," said Aravind Srinivas, co-founder and CEO of Perplexity. "We are moving away from the clutter of SEO spam and sponsored links toward a more efficient way to consume and share information, fostering a new era of accelerated learning and research."

Perplexity offers a free version of its platform, enabling users to search using the default AI model. For those seeking enhanced capabilities, a Pro version is available for $20/month. This tier allows users to choose between models, including GPT-4, for improved results and grants access to Perplexity API credits for integrating advanced open-source LLMs into projects, along with unlimited querying for Perplexity Copilot, the company's interactive research assistant.

"Copilot refines search queries with tailored follow-up questions, introducing generative user interfaces that alleviate the need for perfect phrasing. This feature empowers users to obtain more relevant and comprehensive answers than traditional search engines or chatbots," Srinivas added.

Significant growth, but challenges ahead

Since its launch a year ago, Perplexity has gained notable traction, reporting 10 million monthly active users and over a million mobile users. The platform processed more than half a billion queries in 2023, with Copilot particularly popular among academics, students, and professionals who require regular research support.

Despite this promising start, Perplexity acknowledges the challenge of fulfilling its mission "to serve the entire planet’s unbounded curiosity." Google and Microsoft boast billions of users and are integrating generative AI into their search engines; Google is piloting its new Gemini model, improving response latency by 40%, while Microsoft Bing utilizes GPT-4 and DALL-E 3 for enhanced information searches and image generation. However, unlike its competitors, Perplexity does not clutter its results with ads and links.

As Perplexity continues to innovate, it will be fascinating to see how it capitalizes on its unique features, such as model flexibility, to challenge these industry giants and advance knowledge discovery in the AI age.