How to Invest in Perplexity AI in 2024
Perplexity AI, a rapidly growing AI-based search engine company, is making waves in the tech world with its innovative approach to providing accurate, reliable, and real-time answers to user queries. As of July 2024, the company has answered approximately 250 million questions, a significant increase from the 500 million queries it handled throughout 2023. This surge in activity has been mirrored by a sevenfold increase in annual recurring revenue (ARR), which has grown from $5 million to $35 million since the beginning of the year.
Investment Opportunities in Perplexity AI
Perplexity AI remains a private entity, meaning it does not trade on public stock exchanges and lacks a stock symbol. However, interested investors can still acquire shares through Hiive, a platform that facilitates the trading of private company stocks among accredited investors.
Accreditation Requirements
To invest in Perplexity AI via Hiive, one must qualify as an accredited investor by meeting one of the following criteria:
– An individual annual income of $200,000 or a joint income of $300,000.
– A net worth exceeding $1,000,000, excluding the primary residence.
– Status as a qualifying financial professional.
As of August 2024, Hiive lists six Perplexity AI stock offerings, with sellers typically being current or former employees, venture capitalists, or angel investors. Buyers can negotiate prices directly with sellers or accept the listed asking prices. Additionally, Hiive allows users to track companies and receive updates on new listings or completed transactions.
Retail Investor Limitations
Currently, retail investors cannot purchase Perplexity AI shares due to its private status. Non-accredited investors must wait for a potential initial public offering (IPO) to participate. However, there is no set timeline for Perplexity AI to go public, as the company continues to secure funding from private markets, allowing it to maintain control and privacy while avoiding the complexities of public trading.
Alternative Investment Options
While direct investment in Perplexity AI is limited, investors can consider publicly traded AI-driven search companies like Alphabet (GOOGL) and Microsoft (MSFT). Alphabet, the parent company of Google, remains a dominant force in search, processing billions of queries daily. Microsoft, with its AI-powered Bing search engine and a significant stake in OpenAI, offers another avenue for those interested in the AI search market. Additionally, owning shares in Nvidia (NVDA) or SoftBank (SFTBY) provides indirect exposure to Perplexity AI, although these investments are relatively small compared to their overall market capitalizations.
Founders and Business Model
Perplexity AI was founded in 2022 by a team of industry veterans:
– Aravind Srinivas: CEO, previously an AI research scientist at OpenAI.
– Denis Yarats: CTO, formerly with Meta as an AI research scientist.
– Johnny Ho: Chief Strategy Officer, with experience at Quora and as a quantitative trader.
– Andy Konwinski: Co-founder of Databricks.
The company operates on a freemium model, offering core features for free while charging for premium services like image uploads. With a user base of 10 million monthly active users as of January 2024, Perplexity plans to shift from a subscription-based model to an advertising-based one by September 2024[1][2].
Valuation and Financial Backing
In its most recent funding round in July 2024, Perplexity AI raised $250 million, tripling its valuation to $3 billion. This round increased the total amount raised to $415 million. Notable investors include Jeff Bezos, Tobi Lutke, Yann LeCun, Andrej Karpathy, Susan Wojcicki, and several major venture capital firms such as Bessemer Venture Partners and Sequoia Capital.
Perplexity AI’s growth trajectory and innovative approach to AI-powered search make it a compelling company to watch, with potential investment opportunities on the horizon as it continues to expand its market presence.
FAQs About Investing in Perplexity AI
What is Perplexity AI?
Perplexity AI is an AI-powered search engine company that provides accurate and real-time answers to user queries. It has seen significant growth in user engagement and revenue, making it a noteworthy player in the AI industry.
How can I invest in Perplexity AI?
Currently, Perplexity AI is a private company, and shares can only be purchased through platforms like Hiive, which cater to accredited investors. This means you must meet certain income or net worth criteria to invest directly.
What are the risks of investing in AI companies like Perplexity AI?
Investing in AI companies involves risks such as market volatility, technological changes, and competition. It’s important to conduct thorough research and consider your risk tolerance before investing.
Is Perplexity AI planning to go public?
As of now, there is no announced timeline for Perplexity AI to go public. The company continues to raise funds privately, which allows it to maintain control and privacy.
What are some alternative ways to invest in the AI sector?
If you are unable to invest directly in Perplexity AI, consider investing in publicly traded AI companies like Alphabet, Microsoft, or AI-focused ETFs. These options provide exposure to the growing AI industry.
What is Perplexity Pro?
Perplexity Pro is a premium service offered by Perplexity AI, providing additional features beyond the free version. This includes advanced search capabilities and other enhancements designed for power users.