AI Startup Perplexity Prepares for Fourth Funding Round, Eyes $8 Billion Valuation

Investors remain fervent about artificial intelligence startups. Perplexity, an AI search engine upstart, has initiated negotiations for its fourth round of financing this year, aiming to raise up to $1 billion at a valuation of $8 billion.

According to insiders, just a few weeks after OpenAI completed one of the largest financing rounds in Silicon Valley history, new investors have taken an interest in Perplexity. These insiders say that the company is currently in talks to raise between $500 million to $1 billion, which could value the company at $8 billion, more than double its previous valuation.

Insiders also say that over the past month, the intensity and interest in AI company financing deals have increased.

This wave of enthusiasm is partly due to OpenAI's massive funding round earlier this month. OpenAI's $6.6 billion funding round, which valued the company at $150 billion, has set a new benchmark for artificial intelligence startups.

Recently, OpenAI co-founder Ilya Sutskever and AI goddess Fei-Fei Li have successfully raised funds for their respective startups. An insider reveals that Mira Murati, former Chief Technology Officer of OpenAI who left the company this month, is also in preliminary discussions with investors about raising funds for a new venture.

However, this has also intensified concerns that the industry is forming a bubble, with unprofitable startups spending billions of dollars to train cutting-edge AI models. Some venture capital investors have expressed that Perplexity's proposed valuation seems to have exceeded the level it should be at.

This startup, co-founded by former OpenAI researcher Aravind Srinivas and others, will depend on its ability to grow its user base and handle complaints. The company says that in July alone, its search engine handled 250 million queries, compared to 500 million for the entire last year.

The company is seeking to redesign the search advertising system pioneered by Google and is currently in talks with major platforms to pilot the placement of advertisements. It makes money through subscription fees and says its annualized revenue has grown from $5 million in January to $35 million in August.

Perplexity's current supporters include AI chip maker NVIDIA, Amazon founder Jeff Bezos, and several well-known figures in the AI industry, such as OpenAI co-founder Andrej Karpathy and Meta's Chief AI Scientist Yann LeCun.

The company underwent financing rounds in January and April of this year. This summer, its valuation tripled to $3 billion. Just a few months ago, Perplexity completed a $250 million funding round, which included SoftBank's Vision Fund 2.

Insiders say that the potential fourth round of financing has not yet chosen a lead for Perplexity, nor has it signed any agreements, but existing investors are expected to participate in this round of financing.