Perplexity Lifts Its Valuation To USD$14b

Perplexity, the San Francisco artificial intelligence search company that hopes to loosen Google’s long grip on web queries, is poised to collect roughly 500 million dollars in new equity at a valuation of 14 billion dollars. The deal is being led by Accel, one of Silicon Valley’s older venture capital names, and follows a December round that valued the young business at 9 billion dollars. It will be Perplexity’s fifth equity raise in less than eighteen months and represents a near 60 per cent jump in paper worth over little more than half a year.

The leap is striking even in today’s frenzied generative artificial intelligence market, yet negotiations show that investor enthusiasm has limits. People close to the talks say Perplexity initially sounded out backers at closer to 18 billion dollars, but funds were reluctant to double the company’s worth so soon after the last deal. Agreeing on 14 billion dollars still places Perplexity firmly in the top tier of privately held artificial intelligence developers and hands it a war chest big enough to finance an ambitious product agenda.

Chief executive Aravind Srinivas makes no secret of that ambition. In an interview with the Financial Times last month he argued that conventional search result pages, a cascade of sponsored links ordered by opaque algorithms, no longer satisfy users who want concise answers, source citations and task completion inside a single conversational exchange. Perplexity’s interface looks like a chat window, delivers referenced summaries instead of a list of hyperlinks and currently serves about 30 million monthly active users. That is a fraction of Google’s billions, yet notable for a stand-alone service that is not pre-installed on handsets or bundled with a dominant browser.

Srinivas insists that membership of the one hundred million-plus club will demand infrastructure spending on the scale of the very largest technology groups. Running large language models on every user query, a process known as inference, is costly; specialist graphics processors are expensive and scarce; and usage spikes must be absorbed without delays that might send early adopters back to familiar rivals. Inference and infrastructure swallow most of the expenditure, he says, and while the payroll sits at around two hundred engineers, hardware outlays overwhelm the wages bill.

Those realities explain the start up’s frequent visits to the capital markets. Alongside Accel, its roster of supporters already includes Nvidia, New Enterprise Associates, IVP and SoftBank Vision Fund Two, as well as technology luminaries Jeff Bezos, Andrej Karpathy, Jeff Dean and Yann LeCun. Previous cheques have funded a stream of new features. In April Perplexity launched Voice Mode on Apple devices, letting users dictate emails, hunt YouTube clips and fire further prompts without touching a keyboard. Engineers are now building an agentic browser named Comet that will open tabs, navigate sites and scrape data in response to spoken commands, a direct challenge both to Google Chrome and to similar projects inside OpenAI and Anthropic. One person familiar with the latest round says financing Comet is a central reason for raising fresh capital.

Revenue, though still modest relative to valuation, is climbing. The business earns most of its income from a premium subscription that costs about seventeen pounds a month, offering higher usage caps and faster responses. Internal figures shared with investors show that annualised revenue, which extrapolates the latest monthly sales, rose from five million dollars in January last year to thirty five million dollars in August. For venture backers, swift growth in paying customers helps justify generous multiples, yet the ratio of spending to sales will stay under scrutiny while interest rates remain high and public market floats remain scarce.

Competitive pressure looms on every side. Google has begun threading generative answers into its main engine and enjoys vast distribution through Android phones and its own browser. Microsoft finances OpenAI’s ChatGPT and is embedding artificial intelligence across Bing, Outlook and Office. Perplexity is betting that a focused product, quick update cycles and a reputation for accurate, cited responses can attract a loyal slice of users who are dissatisfied with incumbent services or uneasy about privacy. The company also benefits from the absence of an enormous advertising franchise to defend, letting it test new payment ideas without cannibalising old revenue streams.

The wider market mood remains volatile. Last year Anthropic rose from a four billion dollar price tag to more than eighteen billion dollars in under twelve months after rounds from Amazon and Google, while smaller players commanded eye watering revenue multiples despite minimal trading histories. At the same time, the path to liquidity has narrowed as flotations falter and regulators sharpen their focus on artificial intelligence models. Perplexity has offered no timetable for a listing, and observers argue that the earliest practical window is late twenty twenty six, by which point investors will want clear proof that profit margins can widen even as model sizes balloon and computing bills climb.

For now Srinivas can celebrate a raise that leaves his company among the best funded challengers in the field. The cheque from Accel buys time to finish Comet, secure bulk cloud contracts and target the next wave of corporate clients. Whether five hundred million dollars will build a genuine rival to Google or merely buy another year of development will become clear only when those thirty million monthly users grow, or fail to grow, into nine-figure territory. What is certain is that the race to reinvent search now depends as much on balance sheet muscle as on clever code, and Perplexity has just loaded another magazine of ammunition.