Perplexity AI is in the final stages of securing a massive $500 million funding round, with Accel leading the charge. If finalized, the deal would push Perplexity’s valuation to $14 billion — a 56% jump from its previous $9 billion figure reported just five months ago. That trajectory is staggering when you consider that the company was valued at only $1 billion in April 2024. Within a year, it’s multiplied that figure nearly 14 times.
This latest fundraising effort is slightly dialed down from the company’s earlier target in March 2025. At the time, insiders revealed Perplexity was aiming to raise between $500 million and $1 billion at a possible $18 billion valuation. The current round sticks to the lower end of that range — but it still marks a bold show of confidence in the startup’s future.
Revenue Growth Outpaces the Market
Perplexity’s annual recurring revenue (ARR) is hovering just under $100 million as of early 2025. That’s up from $80 million in January and $50 million back in October 2024. It’s not just growing — it’s accelerating fast. If this trajectory holds, the company could cross the $250 million ARR mark by the end of 2026, a key milestone often used to benchmark IPO readiness.
Still, the $14 billion valuation puts Perplexity at a jaw-dropping 140x ARR multiple. For context, most AI startups are valued at 21.8x to 40.6x, while traditional SaaS companies average around 7.8x. This sky-high premium reflects investor belief in Perplexity’s category-defining potential — but it also raises expectations.
From Startup to Search Engine Disruptor
Founded in 2022 by Aravind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski, Perplexity has become a breakout name in the race to reinvent online search. Headquartered in San Francisco with a lean team of around 100 employees, the company offers something radically different from Google. Instead of link-heavy search results, Perplexity delivers direct, conversational answers — always with citations.
It calls itself “the world’s first fully functional conversational answer engine,” and that’s not just marketing speak. The platform draws on Microsoft Bing for search data and runs on Microsoft Azure infrastructure. Its free plan uses OpenAI’s GPT-3.5, while paid subscribers on Perplexity Pro gain access to enhanced AI models and deeper features.
Product Expansion: Beyond Just Search
Perplexity isn’t stopping at search. It’s expanding fast with a suite of new tools. In January 2025, the company launched “Perplexity Assistant,” a mobile AI that performs tasks across apps while keeping context. Then came “Sonar,” an API for developers looking to integrate Perplexity’s AI search capabilities into their own platforms. The company is also working on “Comet,” an AI-powered web browser built around agentic search — its latest bet on the future of how we interact with the internet.
A Crowded Market, but Big Opportunities
Perplexity is up against giants — Google, Microsoft, OpenAI, and Anthropic all have search or AI chat tools in play. But there’s an opening. Google’s dominance in search is starting to slip, with Apple recently revealing a 7% drop in Safari search traffic attributed to rising alternatives like Perplexity.
Apple reportedly plans to give users the option to choose AI search engines like Perplexity within Safari. That could dramatically boost Perplexity’s reach and cement its place in the browser wars.
Could the IPO Come Sooner Than 2028?
CEO Aravind Srinivas has publicly said the company doesn’t plan to go public before 2028. But the market may have other plans. Secondary market demand for Perplexity shares is strong, and institutional investors are already circling. With its current growth rate and soaring valuation, a 2026 or 2027 IPO is starting to look very realistic.
Of course, hurdles remain. The company must manage ongoing legal battles with publishers and scale its technology to stay ahead of fast-moving rivals. But its recent moves — from product expansion to revenue-sharing deals — suggest it’s laying the groundwork to become a dominant player.
As Perplexity closes in on a $14 billion valuation, it’s no longer just a startup to watch — it’s a serious contender to lead the next wave of AI-native public companies. Whether the IPO comes in two years or four, one thing is clear: Perplexity is reshaping the search engine market, and the industry is paying close attention.
