A buzzy artificial intelligence startup in San Francisco appears to be on the verge of doubling its total funding in a round that could also triple its valuation.
Perplexity AI has raised $165 million over the past year across three rounds including $63 million in fresh funding which valued the startup at just over $1 billion, the company announced on Tuesday.
However, Perplexity is already in talks with investors about a new round that would turbocharge its funding and valuation, according to a report by TechCrunch.
Those discussions could net Perplexity at least $250 million more in cash, which would more than double its total funding, and potentially value the company as high as $3 billion.
The company previously announced a Series B round in January that was just shy of $75 million and around $25 million in Series A round just over one year ago.
Barely two years old, CEO Aravind Srinivas co-founded Perplexity in 2022 with CTO Denis Yarats, Chief Strategy Officer Johnny Ho and Andy Konwinski.
Before starting Perplexity, Srinivas was briefly a research scientist at OpenAI and Konwinski also co-founded Databricks more than a decade ago.
The startup declined to comment on the funding talks.
Perplexity is developing an AI-powered search tool that can respond to queries presented in a conversational manner, which is a key feature of generative AI software.
However, that capability needs a lot of expensive computing power and AI companies are searching for ways to monetize their products. Free chatbots just won't cut it.
Perplexity appears to be developing with enterprise clients in mind early on, though its products won't exclude external web searches, Srinivas explained in a thread on X.
"There's a big misconception that enterprise means internal search and consumer means external. But most people in every company spend a lot of time on the web during work time," Srinivas wrote. "Traditional search engine is probably the most used enterprise tool, even though it's not called as one. It's free, doesn't go through any IT security, and you pay for it essentially through your data, time and lost attention."
The company announced a Pro version of its software on Tuesday that will start at $40 a month or $400 annually per employee.
Early customers of Perplexity's Enterprise Pro software include Stripe, Zoom, Snowflake, the Cleveland Cavaliers, Databricks, HP, and Replit, the company said in a blog post.
Perplexity also said that its latest funding round was led by former Y Combinator partner Daniel Gross and also included current YC CEO Garry Tan, Figma CEO Dylan Field, Amazon founder Jeff Bezos, Nvidia, Shopify CEO Tobi Lütke, Elad Gil, Nat Friedman, Naval Ravikant, Andrej Karpathy, IVP and NEA.
Investors continue to pour money into AI startups even as they have pulled back from other sectors.
Former Stanford University President Marc Tessier-Lavigne launched an AI-powered drug discovery biotech startup on Tuesday with $1 billion in backing from a group of investors that includes Arch Venture Partners, Foresite Labs, Sequoia Capital, NEA, F-Prime Capital, Lux Capital, Lightspeed Venture Partners, Menlo Ventures, Two Sigma Ventures and SV Angel.
Two Sunnyvale-based robotics startup have raised megarounds this year. Figure AI raised $675 million in a round announced in February, and Cobot announced a $100 million round earlier this month.
Bay Area accelerators Y Combinator and Berkeley SkyDeck have both leaned more deeply into the AI wave with their latest batches, as well.
