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AI-powered search engine Perplexity AI, now valued at $520M, raises $70M

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Perplexity AI, an AI-powered search engine, has successfully raised $70 million in a funding round led by IVP, with additional investments from NEA, Databricks Ventures, Elad Gil, Tobi Lutke, Nat Friedman, Guillermo Rauch, Nvidia, and Jeff Bezos. The funding places Perplexity’s valuation at $520 million post-money. Despite the competitive landscape dominated by giants like Google, Perplexity aims to distinguish itself by delivering a superior search experience through its innovative approach.

Founded in August 2022 by Aravind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski, who bring expertise in AI, distributed systems, search engines, and databases, Perplexity offers a unique chatbot-like interface for users to pose questions in natural language. The AI responds with a summarized answer, citing sources such as websites and articles. Subscribers to Perplexity’s Pro plan ($20 per month) gain access to a variety of gen AI models, including Google’s Gemini, Mistra 7Bl, Anthropic’s Claude 2.1, and OpenAI’s GPT-4, allowing for features like image generation, personalized searches, and document analysis.

Perplexity’s CEO, Aravind Srinivas, a former OpenAI researcher, highlights the platform’s search filtering and discovery options, such as the ability to limit searches to academic papers and browse trending topics submitted by users. Despite skepticism about the long-term viability of gen AI search tools due to their high operational costs, Perplexity aims to diversify its offerings. It is introducing its own gen AI models through an API for Pro customers, leveraging its search index and the public web for enhanced performance.

While Perplexity’s annual recurring revenue currently stands between $5 million and $10 million, the substantial costs associated with training gen AI models remain a consideration. However, Perplexity remains optimistic about its differentiated approach and continued innovation in the evolving landscape of AI-powered search engines.

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