Perplexity AI Inc., the creator of an artificial intelligence search engine and a competitor to OpenAI, today revealed it has closed on a hefty $500 million funding round that brings its value to a cool $9 billion.

The round was announced by Bloomberg, and came shortly after Perplexity confirmed it had closed on its second-ever acquisition, buying a company called Carbon, officially known as JDCT Inc., for an undisclosed price.

Institutional Venture Partners is said to have led Perplexity’s latest funding round, which closed earlier this month. No other participants were mentioned in Bloomberg’s report.

The funding makes Perplexity one of the most valuable generative AI startups of all. At the start of the year, the company was valued at just $520 million, but since then it has closed on a string of big-money funding rounds, growing its value to $3 billion by the end of June, before tripling it with the latest round, which had been reported for some time prior to being confirmed.

All told, Perplexity has closed on four separate rounds of funding this year.

The latest round is yet another indication that investors show no signs of letting up on their enthusiasm for AI startups. In particular, there’s a lot of belief in the potential of generative AI to rethink the way people search for things online.

Perplexity, founded in 2022, is different from other chatbots with its focus on providing real-time information. When prompted, it searches the Web for the most up-to-date information, but instead of producing a series of links, it responds to users in a way that’s more like ChatGPT.

The company may well need the latest funds, though, as it faces growing competition from a host of other players in the AI business. This week, OpenAI began rolling out more search features within its iconic chatbot, and both Google LLC and Microsoft Corp. have revamped their search tools, adding more conversational features within them.

In addition to its free app, Perplexity sells subscriptions that give users access to more advanced features. For instance, it offers premium subscribers a tool that allows them to search internal files on their own computer, and it also provides enhanced finance-related features, for looking up stock prices and earnings reports. In March, Perplexity said it had more than 15 million active users.

The acquisition of Carbon, first announced by TechCrunch, is likely a move to boost those premium features. The startup specializes in retrieval-augmented generation or RAG technology that connects AI systems to external data sources such as Google Docs, Slack, Notion and other business and productivity applications. The tech will enable Perplexity to search through users files and work messages, and those features will become available early next year.

The deal also hints at the possibility that Perplexity is looking to cater more to enterprise users, perhaps allowing company employees to search through the masses of unstructured, internal data at their organizations, so they can work more efficiently.

“We believe your AI should be personal to you — at home, work, or on the go — and data connectivity is a key part of everyone’s daily workflows,” Perplexity Chief Executive Aravind Srinivason wrote in a blog post announcing the acquisition. “Carbon will make it easier for Perplexity’s answer engine to be informed by diverse sources of information, whether that data resides in internal databases, cloud storage, or document repositories.”

Carbon had previously raised $1.3 million in a seed funding round that was announced last year, backed by investors including Treble and MKT1, plus several angels. Carbon’s four employees will join Perplexity as part of the transaction.

Enterprise search is another area that has also gotten the attention of OpenAI. After closing on its latest $6.6 billion funding round in October, OpenAI reportedly told its investors that they’re not allowed to invest in a company called Glean Technologies Inc., which is widely regarded as the leader in AI-powered enterprise search.

It’s said that OpenAI, along with Google and other AI giants, are all working to build rival enterprise search products to compete with Glean, and it seems that Perplexity may have similar ambitions too.

Image: Perplexity AI