January 5, 2024

Perplexity AI Secures $74 Million to Challenge Google and Microsoft Bing with AI-Driven Search

California-based startup Perplexity AI, just a year into its mission to revolutionize knowledge discovery through an AI-native search engine, has announced a successful $73.6 million Series B funding round.

The funding round was led by IVP, with contributions from NEA, Databricks, Nvidia, Bessemer Ventures, and Kindred Ventures. Notable tech luminaries such as Jeff Bezos, Elad Gil, Nat Friedman, Tobi Lutke, and Guillermo Rauch also joined as backers.

Having raised a total of $100 million with an estimated valuation exceeding $500 million, Perplexity intends to utilize the capital to enhance its AI-driven search engine capabilities, competing directly with industry giants Google and Microsoft in the era of generative AI and large language models (LLM).

What sets Perplexity AI apart?

While Google and Microsoft have long been dominant players in the search engine space, Perplexity aims to challenge and potentially surpass them by offering a superior AI-native experience. The startup provides a knowledge search platform that merges web indexes with various AI models to deliver precise answers in a conversational manner, eliminating the need for users to click through multiple links, including ads and sponsored posts, or compare results.

To further enhance user experience, Perplexity allows users to explore information in-depth by navigating relevant sources and citations alongside the search results.

Aravind Srinivas, co-founder and CEO of Perplexity, wrote in a blog post:

“In an era where misinformation and AI hallucinations are causing increasing concern, we’re built on the idea that accuracy and transparency are prerequisites to making AI-powered search ubiquitous. The times of sifting through SEO spam, sponsored links, and multiple web pages will be replaced by a much more efficient way to consume and share information, propelling our society into a new era of accelerated learning and research.”

The company offers a free version of its platform, utilizing the default model. For more advanced features, there is a Pro version priced at $20/month, providing users the option to choose models such as GPT-4 for superior results.

The paid tier also includes Perplexity API credits, enabling the integration of cutting-edge open-source LLMs into projects, and unlimited querying support for Perplexity Copilot, the company's interactive research assistant.

Srinivas added:

“Copilot tailors search queries with custom follow-up questions, introducing the concept of generative user interfaces. It removes the burden of prompt engineering and does not require users to ask perfectly phrased questions to get the answers they seek. This enables users to gain more relevant and comprehensive answers than other AI chatbots, traditional search engines or research tools.”

Impressive growth, yet challenges ahead

Perplexity, having launched its search engine just a year ago, claims significant traction with 10 million monthly active users and over a million mobile users. The platform serviced over half a billion queries in 2023, with Copilot gaining popularity among academics, students, and knowledge workers.

Despite this promising start, it's important to recognize that Perplexity is still a considerable distance from its ultimate goal of serving the global curiosity. Both Google and Microsoft boast billions of users and are actively integrating generative AI into their search engines, albeit with links and ads — something Perplexity does not include in its results.

The journey ahead will be intriguing as Perplexity seeks to leverage its unique features, such as model flexibility, to compete with these industry giants and scale its impact on knowledge discovery in the AI age.

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