Perplexity AI Valuation Jumps to $20B in New Funding
The burgeoning AI landscape continues to witness unprecedented growth, with the latest reports indicating that AI search startup Perplexity is in advanced talks to raise new capital at a staggering $20 billion valuation. This marks a significant ascent for the company, representing a swift $2 billion increase from its reported $18 billion valuation just last month. The news, breaking on August 13, 2025, underscores the intense investor confidence and rapid expansion characterizing the artificial intelligence sector.
Perplexity, founded in 2022 by a quartet of engineers with deep backgrounds in AI and machine learning – Aravind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski – has quickly carved out a niche in the competitive AI search market. Unlike traditional search engines that present users with a list of links, Perplexity leverages large language models (LLMs) and real-time web search capabilities to synthesize direct, conversational answers, critically providing citations for transparency and verification. This “answer engine” approach aims to address the common issue of “hallucination” seen in some pure generative AI models by grounding responses in verifiable web sources.
The company’s valuation trajectory has been nothing short of meteoric. Starting 2024 with a valuation of approximately $520 million, Perplexity rapidly climbed to $1 billion by April 2024, then $3 billion by mid-2024, and reached $9 billion by December of the same year. A $500 million funding round in June 2025 pushed its valuation to $14 billion, followed by an $18 billion valuation in July 2025. This latest reported jump to $20 billion within weeks highlights the aggressive pace of investment in the sector. The company has cumulatively raised over $1 billion from a roster of high-profile investors including Jeff Bezos, Tobias Lütke, Nat Friedman, Nvidia, and Databricks, signaling strong belief in its disruptive potential.
Perplexity’s rapid growth is also reflected in its user engagement and revenue. In May 2025 alone, the platform processed an impressive 780 million queries, demonstrating over 20% month-over-month growth and averaging around 30 million queries daily. Its annual recurring revenue (ARR) has reportedly surged approximately 20-fold since January 2024, with its revenue run rate nearly doubling to almost $100 million between October 2024 and May 2025. The company offers a freemium model, with a paid Pro subscription providing access to more advanced language models and features. Recent product expansions include the Perplexity Assistant, launched in January 2025, a Shopping Hub introduced in November 2024, and new finance-related features rolled out in October 2024.
Operating in an increasingly crowded arena, Perplexity faces formidable competition from tech giants and other well-funded startups. Its primary rivals include Google Gemini (formerly Google Bard), OpenAI’s ChatGPT, Anthropic’s Claude, and Microsoft Copilot (Bing AI). While Google continues to dominate the overall search market, Perplexity’s focus on cited, concise answers positions it as a distinct alternative for users seeking verifiable information.
Beyond its core product, Perplexity has also made headlines with audacious strategic maneuvers. In July 2024, it launched a publisher program aimed at sharing ad revenue with content partners. More recently, in January 2025, the company submitted a proposal to merge with TikTok US, and in a bold move on August 12, 2025, Perplexity reportedly offered $34.5 billion to acquire Google Chrome, framing the bid as both a growth opportunity and an antitrust statement. These actions underscore Perplexity’s ambition to reshape the digital information landscape. However, its ascent has not been without challenges, as the company has faced legal scrutiny over allegations of copyright infringement, unauthorized content use, and trademark disputes.
Perplexity’s swift rise and substantial new valuation reinforce the ongoing investor appetite for innovative AI solutions, particularly those that promise to redefine fundamental digital interactions like search. As the AI market matures, the company’s ability to navigate competitive pressures and legal complexities while maintaining its unique value proposition will be key to sustaining its impressive momentum.