Perplexity AI, the AI-powered search engine startup, has successfully closed a massive $500 million funding round that catapults its valuation to $9 billion, according to sources familiar with the matter who spoke to Bloomberg. This remarkable achievement represents a tripling of the company’s valuation in just six months, following a previous investment from SoftBank that valued Perplexity at $3 billion in June 2024.
The latest funding round was led by Institutional Venture Partners (IVP), a prominent venture capital firm. CNBC had previously reported in November that Perplexity was in the final stages of securing this substantial investment. Both Perplexity and IVP representatives declined to comment or did not respond to requests for comment on the funding details.
Perplexity joins an elite group of high-flying AI startups that have experienced explosive valuation growth throughout 2024, driven by an intense feeding frenzy among venture capitalists and investors eager to capitalize on the artificial intelligence boom. The competitive landscape includes several notable players: Anthropic, creator of the Claude AI model, secured an additional $4 billion investment from Amazon in November. That same month, Elon Musk’s xAI raised $5 billion, achieving a $50 billion valuation. Perhaps most impressively, OpenAI announced a $6.6 billion raise in October at a historic $157 billion valuation.
However, these massive investments come against a backdrop of mounting legal challenges facing AI companies. In October, News Corp, owner of The Wall Street Journal and New York Post, filed a lawsuit against Perplexity, accusing the startup of copyright infringement. This legal battle mirrors similar challenges faced by OpenAI, which is defending itself against a lawsuit filed by The New York Times last year. The publication alleges that OpenAI used “millions” of articles to train its ChatGPT model without proper authorization. Both Perplexity and OpenAI have denied these allegations, but the controversies highlight growing tensions between AI companies and content creators over data usage and intellectual property rights.
Key Quotes
Perplexity AI closed a $500 million funding round earlier this month, pushing its valuation to $9 billion
This statement from a source familiar with the matter, reported by Bloomberg, reveals the extraordinary growth trajectory of the AI search startup, which has managed to triple its valuation in just six months since its previous $3 billion valuation in June 2024.
The publication said OpenAI used ‘millions’ of articles to train the startup’s ChatGPT model
This allegation from The New York Times’ lawsuit against OpenAI highlights the central legal controversy facing AI companies: whether using copyrighted content to train AI models constitutes infringement, a question that could have massive implications for the entire industry’s future.
Our Take
Perplexity’s meteoric rise exemplifies both the promise and peril of the current AI boom. The company’s ability to command a $9 billion valuation while simultaneously facing copyright litigation reveals a market willing to bet big on AI’s future despite unresolved fundamental questions about its legal foundations. This disconnect suggests investors believe either that these legal challenges will be resolved favorably for AI companies, or that the technology’s potential value far outweighs the legal risks. What’s particularly striking is the speed of valuation growth across the sector—Perplexity, Anthropic, xAI, and OpenAI have collectively raised tens of billions in 2024 alone. This capital influx is creating an AI arms race that may be moving faster than regulatory and legal frameworks can adapt, setting up potential conflicts that could reshape the industry’s trajectory in coming years.
Why This Matters
This funding announcement underscores the unprecedented investor appetite for AI companies despite mounting legal and ethical challenges. Perplexity’s ability to triple its valuation in six months demonstrates that venture capital continues to flow heavily into the AI sector, even as questions about copyright infringement and data usage remain unresolved.
The $9 billion valuation positions Perplexity as a serious competitor in the AI search market, potentially challenging Google’s dominance in search technology. This matters because it signals a fundamental shift in how users may discover and consume information online, moving from traditional search engines to AI-powered answer engines.
The simultaneous occurrence of massive funding rounds and copyright lawsuits reveals a critical tension in the AI industry: companies are racing to build transformative technologies while the legal framework governing their data usage remains contested. How courts resolve these copyright disputes could fundamentally reshape the AI industry’s business models and determine which companies can sustain their current trajectories. For businesses and content creators, this represents both an existential threat and an opportunity to establish new licensing models for the AI era.
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Source: https://www.businessinsider.com/perplexity-ai-valuation-funding-500-million-9-billion-2024-12