$500M at $14B valuation: Is Perplexity nearing an IPO?

Perplexity AI is currently in advanced negotiations to secure $500 million in a funding round led by venture capital firmAccel. The new $14 billion valuation represents a remarkable 56% increase from its $9 billion valuation in December 2024. The company’s growth has been extraordinary, rising from around$1 billion in April 2024to $3 billion by mid-2024, reaching$9 billion by late 2024, and potentially hitting $14 billion.
The current funding negotiations reflect a revised target from earlier this year. In March 2025, Perplexity reportedlyaimedto raise between $500 million and $1 billion at an $18 billion valuation. Sources close to the situation indicate that the current round targets the lower end of the initial fundraising goals.
As of early 2025, Perplexity isgeneratingjust under $100 million in annual recurring revenue (ARR). This shows significant growth, with one source indicating that ARR reached $80 million in January 2025 — a 60% increase from the $50 million reported in October 2024. A $14 billion valuation would put the company’s valuation-to-revenue multiple at approximately 140×, far exceeding average industry benchmarks for AI startups (21.8X – 40.6X) and traditional SaaS companies (7.8X).
Founded in 2022 byAravind Srinivas(CEO),Denis Yarats(CTO),Johnny Ho(Chief Strategy Officer), and Andy Konwinski, Perplexity AI has quickly established itself in the search engine industry. Based in San Francisco, the company employs about 100 people and is known for its AI-assisted search tools that condense information into clear, conversational summaries with citations from original sources.
Perplexity’s primary offering is its AI-driven search engine, which fundamentally differs from traditional ones. Instead of presenting a list of links, it delivers direct, conversational responses with source citations, allowing users to verify facts and explore topics more deeply. The platform is “the world’s first fully functional conversational answer engine.”
Sources indicate that Perplexity uses Microsoft Azure’s infrastructure and Microsoft Bing to gather web sources. The free version uses OpenAI’s GPT-3.5 large language model, while the paid Pro subscription provides access to enhanced AI models and additional features.
Beyond its primary search engine, Perplexity is diversifying its product line. In January 2025, it launched “Perplexity Assistant,” an AI-driven tool for Android and iOS that performs tasks across different applications while maintaining context. The company also entered the developer tools sector with “Sonar,” an API enabling businesses to integrate AI-powered search capabilities into their applications. Perplexity is reportedly developing an AI-powered web browser called “Comet,” featuring “agentic search” capabilities linked to its search engine.
Perplexity operates in a highly competitive AI search landscape, competing with established tech leaders and emerging AI startups. Its competitors include Google, which offers a traditional search engine alongside its AI Overviews feature, Microsoft-backedOpenAI, which added search functionalities to ChatGPT in late 2024, andAnthropic, which launched web search for its Claude chatbot in March 2025.
Apple plans to incorporate AI search providers like Perplexity as options within its Safari browser, potentially expanding the service’s audience. Apple has also noted a decrease in Google searches on Safari, attributed to the rising use of services like Perplexity, which has contributed to a 7% drop in Google’s market share.
Although CEO Aravind Srinivas has stated that an IPO is unlikely before 2028, market signals suggest otherwise. Perplexity’s rapid growth, significant investor interest, and activity in secondary markets indicate the company might go public sooner, possibly by 2026 or 2027.
Several factors are accelerating this timeline. Perplexity’s current growth trajectory could exceed the $250 million ARR threshold needed for a major tech IPO by late 2026. Early backers and later-stage investors will seek liquidity, especially given the company’s soaring valuation. With competitors like Anthropic and OpenAI also considering public offerings, Perplexity has strong incentives to move quickly and capitalise on its momentum. The substantial premiums on Perplexity shares in secondary markets show robust demand from public market investors eager for exposure to next-generation AI technologies.
However, the path to an IPO presents challenges. Perplexity must navigate legal issues with major publishers while continuing to innovate against tech giants and agile startups. The company’s recent initiatives — launching new products, pursuing international expansion, and developing revenue-sharing deals with publishers — demonstrate awareness of both opportunities and risks.
Perplexity AI stands at a crucial juncture. Its remarkable growth, continuous innovation, and solid investor support position it as a potential first-mover in the wave of AI-native IPOs. While official statements suggest a longer timeline, market dynamics indicate that Perplexity’s public debut could arrive sooner than expected.
As Perplexity approaches a potential $14 billion valuation, its success in executing these strategies while managing competitive pressures and legal challenges will determine whether it can maintain its impressive growth and potentially reshape the traditional search landscape dominated by major tech companies.