Amidst the funding boom in AI startups, Perplexity AI is seeking millions of funds to come on top of the pyramid. VC firm IVP is spearheading an investment in Perplexity, the developer of an AI-powered search engine competing with OpenAI’s ChatGPT and Google’s Bard. 

This recent deal values the one-year-old company at approximately $500 million, a significant increase from the $150 million post-investment valuation in March. Perplexity currently generates $3 million in annual recurring revenue, resulting in a valuation multiple of about 150 times ARR.

The company is in discussions to raise approximately $50 million, following its previous funding round announced just seven months ago. This showcases the continued investor interest in generative AI startups. 

Perplexity’s paid product allows users to find answers and summarise information from uploaded documents like PDFs, offering access to advanced models such as Anthropic‘s Claude and OpenAI’s GPT-4.

CEO Aravind Srinivas, a former research scientist at OpenAI, co-founded Perplexity with former Meta research scientist Denis Yarats, who now serves as the company’s CTO. The company’s user base has recently reached 15,000 paying customers.

This new investment by IVP underscores the firm’s growing interest in generative AI, following their leading role in a $100 million investment in AI language translator DeepL in January, valuing it at $1 billion. 

In the previous year, IVP participated in Jasper’s $125 million Series A funding round, which valued the company at $1.5 billion. Notably, Perplexity’s existing investors include Databricks, NEA, AIX Ventures, Elad Gil, and Nat Friedman.