AI search startups are blowing up

Yesterday’s big news was Google’s plan to blow up its traditional search function in favor of an AI-powered experience. But Google isn’t the only company planning for the next generation of discoverability.

This morning, Bloomberg has news from Andreessen-backed Exa Labs, which has raised $250 million at a $2.5 billion valuation to address the same market. And it’s part of a wave of startups all chasing AI, which has quietly become one of the most attractive targets in consumer AI.

From Bloomberg:

Exa is part of a wave of startups vying to transform the search industry, including Tavily, TinyFish and Parallel Web Systems. Led by former Twitter CEO Parag Agrawal, Parallel recently raised $100 million at a $2 billion valuation in a round led by venture capital firm Sequoia Capital, according to the Wall Street Journal.

At the same time, we’re also seeing conventional tech platforms like Amazon, LinkedIn and Reddit using AI to innovate their search and discoverability features – so there will be plenty of potential buyers if any of the startups start selling.

Its closest competitor is ChatGPT, which still owns the interface layer and before Google’s launch handled the vast majority of AI-powered searches that occurred on any given day. But OpenAI can’t make search a priority and Google has an advertising business to protect, which could open up room for a smaller lab like Exa or Parallel to carve out a niche for itself.