Sequoia-Backed AI Design Tool Acquired, Shut Down Within Months
Sequoia-Backed AI Design Startup Acquired Then Shut Down
In a surprising turn of events, Visual Electric, an AI-powered design tool startup that received funding from Sequoia Capital, has been acquired by search company Perplexity - only to announce its impending shutdown within 90 days.
Acquisition Details
The acquisition was announced today through Visual Electric's official website and later confirmed by Perplexity CEO Aravind Srinivas on social media platform X. Notably absent from announcements was any disclosure of financial terms surrounding the transaction.
The Visual Electric team will transition to Perplexity's newly formed "Agent Experience" department, suggesting Perplexity may be looking to incorporate visual AI capabilities into its existing search products.
About Visual Electric
Founded in 2022 by industry veterans:
- Colin Dunn (Facebook, Dropbox alum)
- Adam Menges (former Apple employee)
- Zac Stiglitz (ex-Microsoft engineer)
The platform targeted professional designers with its innovative approach combining:
- Infinite digital canvas
- AI-powered image generation and editing
- Later-added video generation capabilities
The tool essentially digitized traditional whiteboard brainstorming sessions, allowing designers to rapidly prototype concepts and build creative proposals.
Industry Implications
This acquisition-turned-shutdown follows a growing trend in the competitive AI sector where:
- Larger companies acquire startups primarily for their talent rather than products
- Promising tools struggle to find sustainable business models despite technical innovation
- Investor-backed ventures face pressure for exits amid challenging market conditions
The rapid shutdown suggests Perplexity saw more value in Visual Electric's engineering talent than maintaining the product itself.
What's Next?
Designers currently using Visual Electric have approximately three months to migrate their work before service termination. The industry will be watching closely to see how Perplexity integrates this visual AI expertise into its core search offerings.
Key Points:
- Sequoia-backed Visual Electric acquired by Perplexity
- Product will shut down completely within 90 days
- Founding team joining new "Agent Experience" department
- Tool specialized in AI-powered design workflows
- Acquisition amount remains undisclosed
