According to CNBC, Perplexity, a US-based AI search unicorn, is in the final stages of a new round of $500 million in funding, which will soar its valuation to $9 billion (approximately RMB 64 billion), triple its valuation from five months ago, marking an astonishing growth rate.

01 Raises $6.4 billion in two years, valuation exceeds $60 billion

In September 2022, Perplexity successfully raised $3.1 million in seed funding before its product launch.

Subsequently, in March 2023, the company secured $25.6 million in Series A funding, pushing its valuation to $150 million.

By 2024, Perplexity's fundraising activities intensified, and its market valuation continued to rise. Early in the year, the company completed a Series B funding round led by IPV, raising $73.6 million, bringing its valuation to $520 million. Notably, its investor list includes industry giants and celebrities, such as NVIDIA, big data solution provider Databricks, and former Amazon CEO Jeff Bezos, former Twitter executive Elad Gil, and former GitHub CEO Nat Friedman.

In April, Perplexity announced the successful completion of approximately $63 million in funding, with a market valuation exceeding $1 billion. This round was primarily funded by individual investors, with Daniel Gross as the lead investor, and participation from billionaires such as Stanley Druckenmiller, Y Combinator CEO Garry Tan, and Figma Inc. CEO Dylan Field.

A few months later, Perplexity completed another $250 million funding round led by Bessemer Venture Partners, with participation from several existing shareholders and SoftBank Vision Fund II. At this point, Perplexity's market valuation reached $3 billion.

Recently, Perplexity announced the completion of a new $500 million funding round led by IVP. Compared to the beginning of the year, the company's valuation has increased 16-fold to $9 billion.

In just over two years since its inception, Perplexity has raised a total of $915 million (approximately RMB 6.4 billion) in funding, with a valuation of $9 billion (approximately RMB 64 billion).

According to media reports, the search frequency per user on the Perplexity platform is approximately three times that of Google. It is expected that by the end of 2024, the number of monthly active users will reach 100 million. Commenting on this phenomenon, NVIDIA Vice President Jonathan Cohen said, "Perplexity is leading a revolution in how we access information."

Investors are betting on the future of AI search. Perplexity is one of the ambitious, smaller but promising companies in this AI race. Its uniqueness lies in not focusing on building a multi-purpose large language model. Instead, it follows the approach of one of the world's largest tech companies by focusing on a specific product: search.

02 Three post-90s founders, team of only 50

Perplexity's three founders: Johnny Ho, Aravind Srinivas, Denis Yarats (from left to right)

The youngest is Aravind Srinivas, a 1994-born Indian, who obtained a master's degree in electrical engineering from an Indian Institute of Technology branch and pursued a Ph.D. in computer science at the University of California, Berkeley, where he interned at OpenAI, DeepMind, and Google. After graduation, Aravind joined OpenAI to research language models and diffusion models.

By the summer of 2022, AI startups were booming, and Aravind was eager to participate. Like most startups, Perplexity originated from a product idea. Aravind found that Google often failed to provide the results he wanted, and the search process was too cumbersome, so he decided to create a search engine that could directly generate answers, even aiming to surpass Google.

Aravind's idea resonated with Denis Yarats, who had previously published highly similar papers due to their shared research interests. Both believed that future search should be more efficient. Denis previously worked as an AI scientist at Microsoft Bing, Quora, and Facebook.

Additionally, Aravind and Denis recruited Johnny Ho, a Chinese-American teenager. Johnny started programming at age 12 and won the International Olympiad in Informatics (IOI) with a perfect score while still in high school in 2012. Afterward, Johnny was admitted to Harvard University and worked at Quora, the largest Q&A platform in the US, after graduation.

With this, the three founding members were assembled. Perplexity was officially established in August 2022, aiming to create an AI search engine that could defeat Google.

Perplexity AI is an AI search application built on large models. Unlike traditional web-based search that lists results, it provides refined and summarized answers with sources using AI tools.

For example, when we input a question, it first breaks it down into keywords, searches the web with these keywords, reads through the search results, and synthesizes them into a readable report, complete with image generation based on the search content and results. Perplexity revolutionizes information search habits by providing immediate answers, making users impatient with traditional links cluttered with ads.

The smarter Perplexity AI attracted 2.2 million visitors in its first month and has seen exponential monthly growth since then. This year, Perplexity AI has seen explosive growth, with Aravind announcing that the number of queries processed by Perplexity AI has surpassed 100 million per week, implying nearly 400 million queries per month. Even NVIDIA's CEO Jensen Huang was impressed, stating that he uses Perplexity AI to search for information every day.

Perplexity AI, created by these three young entrepreneurs, has become a phenomenal product in Silicon Valley. Based on recent sales estimates, Perplexity AI's annual revenue could reach $50 million. Aravind Srinivas's slogan on social media, "Yahoo --> Google --> Perplexity," has further propelled Perplexity into the spotlight.

With fewer than 50 employees, Perplexity aims to expand to 60 by the end of this year. Just a few dozen employees support a valuation exceeding $60 billion and generate tens of millions of dollars in annual revenue.

The entrepreneurial story of "a few people, one company, and hundreds of millions in annual revenue" seems to have become a reality in the era of AI startups. As former Ant Group CEO and Alibaba partner Eric Jing said, in the digital era, one person is a company.

The wave of AI development is similar to the wave of internet development, where capital is betting on the future. Whether it will burst like a bubble or grow into a giant like Google in the AI era remains to be seen.

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