AI startup Perplexity nears funding at US$14 billion value

[NEW YORK] Perplexity AI, a startup building an artificial intelligence (AI) search engine to compete with Google, is in advanced discussions to raise a new round of funding at a US$14 billion valuation – a jump from its most recent value but lower than it was initially targeting.

Accel Partners is in talks to lead a US$500 million investment in the startup, according to sources familiar with the matter, who spoke on condition of anonymity to discuss private deliberations. Bloomberg News previously reported Perplexity was looking to raise as much as US$1 billion at a valuation of US$18 billion, including the amount raised in the round.

Perplexity and Accel declined to comment. The Wall Street Journal previously reported Accel’s revised fundraising terms.

Founded in 2022, Perplexity has emerged as one of the most prominent startups using generative AI to rethink core Internet services.

Last year, Perplexity tripled its valuation from US$1 billion to US$3 billion and then tripled it again several months later.

However, the startup faces growing competition from Google and OpenAI in its core search business. OpenAI rolled out a search product to all users of its chatbot ChatGPT at the end of last year.

Perplexity has gradually broadened its offerings beyond paid and free versions of its search tool, including plans for an upcoming browser called Comet. Investors are betting on the success of the browser, which aims to take on Google’s Chrome by being more personalised and task-oriented, one of the sources said.

The startup now has US$120 million in annual recurring revenue, according to one of the sources, up from nearly US$100 million in March. BLOOMBERG