It's not your imagination. Artificial intelligence startups are chasing mega funding rounds as they compete for expensive talent and computing power, Perplexity AI's founder says.
CEO Aravind Srinivas acknowledged the competitive environment for funding, talent and computing power during Axios's BFD Live conference on Tuesday.
Srinivas responded to a question from Axios reporter Kia Kokalitcheva about whether AI startups were chasing after each other with what feels like non-stop mega funding rounds.
"It feels like that to me," Srinivas said.
He also pointed to OpenAI as the catalyst for driving up compensation expectations for top software engineers with specialized knowledge for developing AI models.
"These people are expensive, and their salaries all got inflated, because OpenAI started paying them a lot," including large equity-based compensation deals that have grown in value along with OpenAI's own fundraising efforts. "Now that becomes their market value. And now when other companies try to compete with OpenAI for talent, they're also willing to pay that much."
There's also intense competition for specialized chips and server storage which are needed for the development of AI models and products.
"GPUs are expensive, so you've got to go and spend it on cloud," Srinivas said.
Founded in 2022, Perplexity is developing generative AI-powered search tools and has raised $165 million, including a $63 million round that was announced on April 23.
And according to a TechCrunch report released that same day, Perplexity is already discussing raising another round that could add $250 million more cash to its coffers and triple its valuation to as much as $3 billion.
Perplexity's search tool scans content across the internet and internal company data to surface and summarize results, and includes citations for those results.
An emerging concern from critics of summarized search results is that it could potentially tank traffic to the original content, such as news sites. Perplexity's use of citations, much like a Wikipedia page, attempts to provide transparency and traffic to original sources.
Google also held its annual I/O developer conference on Tuesday and announced upcoming changes to search, including more personalization as well as summaries — all of which will be powered by Google's own AI model known as Gemini.
And Google will start rolling out AI-generated search results — which it calls “A.I. overviews" — to U.S.-based users this week, the New York Times reported.
Tech news site Wired declared on Tuesday that it would be the "end of Google search as we know it."
