How to Invest in Perplexity AI in 2024

Google has a new challenger.

Perplexity is an AI-based search engine company aiming to offer accurate, reliable, and real-time answers to users' queries. And it's exploding in popularity.

In July 2024, Perplexity answered roughly 250 million questions — half of the 500 million it answered in all of 2023. Revenue is growing at a similar clip, up 7x since the start of the year ($5 million to $35 million ARR).

This growth has attracted investment from major investors, including SoftBank's Vision Fund 2, which participated in the company's July 2024 round that raised $250 million and tripled its valuation to $3 billion.

Did you know that there's a way for you to invest in Perplexity AI, too?

Can you buy Perplexity AI stock?

Perplexity AI is a private company, which means it doesn't trade on a public stock exchange and there's no Perplexity AI stock symbol. 

However, its stock does trade on Hiive, an investment platform where shareholders of private companies can sell their shares to accredited investors.

Accreditation requirements

To qualify as an accredited investor, you must meet one of the following criteria:

• Have an annual income of $200,000 individually or $300,000 jointly.
• Have a net worth that exceeds $1,000,000, excluding your main residence.
• Be a qualifying financial professional.

There are more than 2,000 private companies with shares available on Hiive, including OpenAI, Figure AI, and SpaceX. As of August 2024, there are 6 listings of Perplexity AI stock available:

Every listing on Hiive is created by a unique seller. Sellers are typically current or former employees, venture capitalists, or angel investors.

Each seller enters the number of shares they want to sell and sets their asking price. After a listing is created, buyers can either accept the asking price as listed or place bids and negotiate directly with sellers.

Buyers can also add companies to their watchlist and get notifications of any new listings or completed transactions.

To see the order book for Perplexity AI, including all bids, asks, and recent transactions, create an account on Hiive with the button below:

Register for Hiive

Can retail investors buy Perplexity AI stock?

In short, no. Since Perplexity AI is still a private company, retail investors cannot buy its shares. Non-accredited investors will have to wait for the company to IPO before they're able to invest.

When will Perplexity AI have its IPO?

The company has not made any indication of a timeline to go public. 

And, if it can continue to attract funding from the private markets (which I expect it will), there's no reason for it to become publicly traded in the immediate future.

By keeping a company private, founders are able to retain more control, keep their financials private, and not have to deal with the regulatory complexities of being a public company. Plus, they might make a lot more money.

For these reasons, I don't expect Perplexity AI to become a public company within the next three years.

Other investment opportunities

Although you may not be able to invest in Perplexity, you can invest in other AI-powered search companies that are publicly traded, such as Google and Microsoft.

Buying either one of these stocks isn't the same as investing in Perplexity, but until its IPO, these are the best available options for retail investors.

Alphabet

Alphabet (GOOGL), the parent company of Google, still dominates search.

In 2023, Google processed 8.5 billion searches per day, about 20x more than Perplexity processed over the entire year. If you're bullish on the future of AI-powered search, it's hard to imagine a world in which Google isn't a big winner. 

That said, Perplexity has and still is leading the race in AI-powered, real-time search.

Microsoft

Microsoft (MSFT) runs its own AI-powered search engine — Bing — and has a 49% ownership stake in OpenAI.

OpenAI's SearchGPT is an AI-powered search engine similar to Perplexity's, though it's just one of OpenAI's many products.

Microsoft's partnership also gives it access to OpenAI's technology, which it has been integrating into many of its core products.

Other options

Additionally, Nvidia (NVDA) and SoftBank (SFTBY) also own stakes in Perplexity, so buying either of these stocks would give you some exposure to Perplexity.

However, both of their investments are extremely small relative to their total market capitalizations of $2.7 trillion and $75.9 billion, respectively.

Who founded Perplexity AI?

Perplexity was founded in 2022 by the following group of people:

• Aravind Srinivas: The company's CEO, who was formerly an AI research scientist at OpenAI and a research intern at both Google and DeepMind.
• Denis Yarats: The CTO, who was formerly an AI research scientist at Meta. 
• Johnny Ho: Perplexity's Chief Strategy Officer, who was formerly an engineer at Quora as well as a quantitative trader.
• Andy Konwinski: The co-founder of Databricks.

This founding team has a singular mission statement for Perplexity: everyone in the world should have the information they need, as fast as possible.

Perplexity's business model

Perplexity operates on a freemium model, where users get its core features for free but can upgrade to a paid subscription for image uploads and other features.

The company hit 10 million monthly active users (MAUs) in January 2024. Given its growth in queries and ARR (mentioned in the introduction), we can reasonably expect this has also grown to somewhere between 50,000–100,000 MAUs.

The company has relied on its freemium model to get it to this point ($35 million ARR), but recently announced its plans to pivot from subscriptions to advertising. 

It plans to launch ads by the end of September 2024.

How much is Perplexity worth?

Perplexity's most recent round came in July 2024, where it raised $250 million at a valuation of $3 billion, triple the valuation it received just three months earlier.

This round brought Perplexity's total amount raised to $415 million.

Perplexity's investors have included:

• Jeff Bezos (Amazon)
• Tobi Lutke (Shopify)
• Yann LeCun (Meta)
• Andrej Karpathy (OpenAI)
• Susan Wojcicki (Alphabet)
• Elad Gil
• Nat Friedman
• Naval Ravikant

A few of its institutional investors are:

• Bessemer Venture Partners
• New Enterprise Associates
• Sequoia Capital
• Laude Capital
• AIX Ventures
• Nvidia (NVDA)
• Databricks
• SoftBank (SFTBY)

Here's a look at how its valuation has changed over time: