Perplexity AI explores $1.5B funding round at $18B valuation

Rapid valuation surge amid rising investor interest

Perplexity AI, the San Francisco-based startup known for its AI-powered search engine, is in preliminary discussions for a funding round that could bring in between $1 billion and $1.5 billion. If the round goes forward at the targeted valuation of $18 billion, it would double the company’s worth from just a few months ago. In December 2024, Perplexity AI was valued at $9 billion, and in April 2024, that figure was just $1 billion—marking one of the fastest valuation climbs in recent tech history.

Founded in 2022 by Aravind Srinivas, Andy Konwinski, Denis Yarats, and Johnny Ho, the company has rapidly attracted high-profile investors and funding. The sharp rise in valuation is tied to a reported annual recurring revenue (ARR) of £100 million, which would imply a revenue multiple of 180x—far beyond typical industry standards. For context, other AI firms such as Anthropic are projected to reach a £30–40 billion valuation with roughly £1 billion in revenue, while OpenAI is currently seeking a valuation near £150 billion.

Aggressive funding rounds through 2024

Perplexity AI has already completed multiple fundraising rounds in the past year. In January 2024, the company raised $73.6 million in a Series B round led by IVP, with participation from Nvidia, Jeff Bezos (via Bezos Expeditions Fund), and others, reaching a $520 million valuation. By March, a $63 million round pushed its valuation past the $1 billion mark, officially entering unicorn territory.

In April 2024, the startup was reportedly seeking at least $250 million at a valuation between $2.5 billion and $3 billion, again with backing from existing investors like NEA and IVP. By November, a $500 million round closed at a $9 billion valuation, tripling the company's value in just a few months. If the current talks succeed, this will mark Perplexity AI’s fifth funding round in under 18 months.

One investor noted, “Computing is costly, so they might need to raise funds,” pointing to the high operational demands of large-scale AI services. Another insider remarked that the startup is navigating a “zeitgeist moment,” which could explain the aggressive fundraising pace.

Expanding offerings and future plans

As the competition in AI search intensifies, Perplexity AI is working to differentiate its product. While Google recently began testing an AI-enhanced search experience called AI Mode, and Anthropic added web search functionality to its assistant, Perplexity aims to blend traditional link-based results with natural-language summaries and source citations.

The company is also preparing to launch Comet, a browser project designed to offer a more interactive, agent-driven search experience. In parallel, it’s enhancing its enterprise offering by enabling AI-based internal document searches and testing advertising options as an additional revenue source.

TikTok merger proposal and IPO speculation

In an unexpected move earlier this year, Perplexity AI proposed a merger with TikTok’s U.S. operations. The revised plan, submitted on January 26, outlines the creation of a new U.S.-based holding company named “NewCo.” According to the terms, the U.S. government could receive up to 50% ownership (non-voting) post-IPO, which would value the combined entity at over $300 billion. ByteDance would retain control over TikTok’s core algorithm, while transferring U.S. operations to the new structure in exchange for equity.

Though Perplexity AI has not formally announced IPO plans, industry observers suggest a potential listing between 2026 and 2027—assuming it reaches key milestones such as $250 million in ARR. However, the momentum behind both its private valuation and strategic partnerships could accelerate that timeline.