Perplexity’s £11 bn Capital Raise: a 140× ARR Wager on the Future of Search

AI-native search challenger Perplexity has inked a $500 m (£400 m) series-E led by Accel, vaulting its valuation to $14 bn (£11.2 bn). The round comes barely six months after its December raise at $9 bn, implying a 56 % uplift and marking its fifth equity event in just 18 months.

Revenue traction versus valuation

Perplexity passed the $100 m annualised-run-rate (ARR) mark in late-March—up from c.$35 m eight months earlier and $5 m at the start of 2024.

At £80 m ARR, the new price tag equates to ~140 × EV/ARR—rich even by Gen-AI standards but not unprecedented (OpenAI priced at ~24 × 2025E sales in its January secondary).

Company	Latest val.	2024/25 ARR	EV/ARR
Perplexity	$14 bn	$100 m	140×
Anthropic	$18 bn*	$1.4 bn	13×
OpenAI (PBC)	$300 bn*	$12.7 bn (’25E)	24×

*private secondary marks

Strategic rationale

• Scale economics of inference. CEO Aravind Srinivas notes that GPU inference remains the largest COGS line; unit costs only come down at hyperscale.

• Browser land-grab. Funds will bankroll Comet, an “agentic” browser intended as a Chrome/Safari substitute—vital because distribution, not model quality, drives search margin.

• Premium mix-shift. Pro subscriptions (£16/mo) and enterprise seats (£32/seat/mo) underpin >90 % of revenue today; advertising CPMs are still being tested.

Market signals

Apple’s Eddy Cue testified last week that Safari search queries fell YoY for the first time ever, attributing the dip to users defecting to Generative-AI engines such as Perplexity and ChatGPT—Alphabet promptly shed 7 % of market cap.

Yet Google still commands c. 89–90 % global share, and its AI Overviews now appear on >13 % of US queries.

MY TAKE

1. 140 × ARR is steep but not irrational. On a forward lens, if Comet unlocks even 0.3 % of global search TAM (~12 bn queries/day), and Perplexity captures £0.005 gross margin per answer, that’s >£65 m incremental profit—enough to normalise the multiple inside three years.

2. Distribution is the battleground. Talks with Apple to embed AI answers natively in Safari matter more than model benchmarks. Whoever owns the default slot captures casual users and the advertising upside.

3. Litigation risk is under-priced. Ongoing suits from Dow Jones and the New York Times over content scraping could impose licensing costs or dampen premium CPMs—investors should haircut long-run margins accordingly.

4. Compute capital intensity favours strategic acquirers. If inference spend continues to outpace revenue, Perplexity may need access to a hyperscaler’s balance-sheet (think AWS or Azure) or pursue an IPO once top-line hits $300 m+.

Investment takeaway

For venture and growth-equity portfolios the round looks fully-priced, but strategically defensive for Accel: by taking the entire cheque they preserve pro-rata and keep Perplexity out of a hyperscaler’s direct orbit. Public-markets investors should watch three catalysts:

• A Safari distribution deal (MAU step-function),

• Successful launch of Comet (retention ↑, bandwidth ↓),

• Settlement of copyright claims (regulatory overhang ↓).

Until one lands, I pencil in a base-case 2026E ARR of $400 m, which would compress the EV/ARR multiple to a still-punchy 35 ×—roughly in line with Anthropic today. High-conviction upside; equally high execution risk.