Perplexity aims to raise $500 million, potentially boosting valuation to $8 billion

Perplexity is reportedly looking to raise close to $500 million in a new funding round that could value the firm at $8 billion.

A Wall Street Journal report on October 20, citing unnamed sources, says the potential funding round would be the company’s fourth within a year and would significantly increase its valuation from $520 million in January and $3 billion this summer.

The report says Perplexity’s annualised revenue has surged to about $50 million, up from $10 million in March.

Perplexity has garnered a lot of attention for its innovative search tools that provide users with the answers they seek in an instant. It employs a number of large language models to do this, including the one from OpenAI and Meta’s Llama. The company has served over 500 million queries in 2023 with barely a whisper of marketing.

The company is also preparing to monetise its platform through ads, which could have a significant impact on the digital ad market.

However, it has also found itself at the centre of controversy, with major media outlets accusing it of plagiarism. This has led to some adjustments in its citation practices and the introduction of a revenue sharing model with publishers.

While this latest potential funding round would be significant in its own right, it comes as Perplexity is also in talks to raise between $500 million and $1 billion at an increased valuation of $18 billion, according to a separate report from Reuters. That would double the company’s previous valuation of $9 billion from November.

Perplexity is backed by big hitters like Jeff Bezos and SoftBank Group. The company is also continuing to add more features to its platform in order to compete with more established players like Google and OpenAI.

Most recently, the company teased a new web browser called Comet, which is designed to execute tasks that are too complex for traditional search engines. The browser also offers Deep Research, which provides users with comprehensive research reports on any topic.