SoftBank to back AI startup Perplexity at $3 billion valuation

A logo of the Oto-san mascot on a banner outside a SoftBank Corp. store in Tokyo, Japan, on Saturday, Aug. 6, 2022. SoftBank Group faces another tough quarterly earnings report, as global concerns over higher interest rates and economic recession batter the valuations of its investments. Photographer: Takaaki Iwabu/Bloomberg

SoftBank Group Corp.’s Vision Fund 2 is investing in US artificial intelligence startup Perplexity AI at a $3 billion valuation, Masayoshi Son’s latest bet on a sector he deems crucial to securing his legacy.

SoftBank will invest between $10 million and $20 million in the firm, which aims to use AI to compete with Alphabet Inc.’s Google search, according to people familiar with the matter. It’s investing as part of a larger $250 million funding round that triples Perplexity’s valuation and makes it one of the industry’s most highly valued companies.

The deal underscores how SoftBank’s preparing to sharply accelerate its pace of AI investment. Its billionaire founder last week laid out a sprawling vision for the future of AI, including a commitment to realize what he called “artificial super intelligence”. Son talked about creating AI thousands of times smarter than any human, making his most grandiose pronouncements since SoftBank retreated from the market following a string of ill-timed startup bets.

“We’ve done many things, but all that’s been a warmup for my dream to realize ASI,” he told investors at an annual shareholders meeting on Friday. “This is what I was born to do.”

The deal hasn’t been finalized and its terms could still change, the people said, asking not to be identified because the discussions aren’t public. Representatives for Perplexity and SoftBank declined to comment on the deal talks. TechCrunch previously reported some details of the broader financing.

SoftBank’s equity investment shores up an existing business tie-up with Perplexity. This year, the startup announced a partnership to offer SoftBank’s Japanese wireless customers a free one-year subscription to its service. That arrangement deepened Perplexity’s ties to Japan, one of the region’s biggest markets.

Perplexity, which is less than two years old, has distinguished itself from other AI chatbots by providing more real-time information. While its primary service is search, the startup calls itself an “answer engine” as it provides results in text format instead of links.

It’s also encountered controversy over a product that summarizes news stories, over whether the product gives outlets due credit for their work.

SoftBank is now expected to quicken the pace of activity around AI services. The group this year directly invested $200 million into Tempus AI, a startup that analyzes medical data. They now plan to set up a joint venture in Japan.

SoftBank is also working on a plan to deploy some $100 billion into AI-related chips in a project dubbed Izanagi, Bloomberg News reported in February. When a shareholder asked last week about Izanagi, Son said he’s committed to obtaining results and that he will work hard to achieve his goals, without elaborating.