Perplexity AI, a US-based AI search engine startup, is reportedly close to securing $500m in a new funding round, Reuters reports citing undisclosed sources.
The deal could boost the company’s valuation to $9bn, sources familiar with the development told the publication.
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The California-based company, which has previously raised $73.6m in a Series B funding round in January 2024, is set to receive the new investment led by Institutional Venture Partners (IVP).
IVP, which holds a board seat at Perplexity, had led the earlier round that valued the startup at around $520m.
The burgeoning sector of AI has seen a surge in investments as companies like OpenAI have demonstrated the potential of large language models with significant funding requirements.
OpenAI recently closed a funding round at $6.6bn, potentially valuing the company at $157bn. The investment round attracted significant contributions from existing backers such as Thrive Capital and Khosla Ventures, alongside OpenAI’s principal corporate supporter Microsoft and new investor NVIDIA.
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By GlobalDataRecently, reports have surfaced indicating that Elon Musk-backed AI startup xAI is in talks with investors to secure funding, with the company aiming for a valuation of around $40bn.
However, the rise of AI search engines has not been without controversy. Media publishers have expressed concerns over the capability of chatbots to aggregate content from the internet, leading to legal challenges for Perplexity.
News Corp-owned publishers filed a lawsuit against Perplexity AI in October, accusing it of extensive illegal copying of copyrighted material.
The New York Times followed with a “cease and desist” notice to Perplexity AI last month.
Despite these challenges, Perplexity AI has garnered support from notable investors, including Amazon founder Jeff Bezos and chip designer Nvidia.
The company is positioned as a key player in the challenge to Google‘s dominance in the search engine market. The Wall Street Journal was the first to report on the funding round being finalised by Perplexity AI in October of 2024.
