The Canadian AI startup Cohere has raised $450 million from new and returning investors, including Cisco and the Canadian pension fund PSP Investments.
This is the first part of Cohere’s months-long fundraising effort. The source, who did not want to be named, also said that the company is still talking about raising more money in the same round, with a value of $5 billion. Since its last private capital raise in June, when investors like Inovia Capital put its value at $2.2 billion, the funding brings it up.
A source said that the generative AI company made $35 million in annualised revenue at the end of March, up from $13 million the previous year. The company makes money by selling its models and apps to businesses that care about data privacy. Reuters said that Cohere was planning to raise between $500 million and $1 billion. It goes up against OpenAI, Anthropic, and Mistral, all of which have raised billions of dollars from big investors like Amazon, Google, and Microsoft.
Basic design Artificial intelligence (AI) companies are racing to get money to pay for the expensive process of building AI models, which need a lot of computing power and the best people in the field. As part of its plan to spend US$2.4 billion ($1.77 billion) on computer and AI research for Canadian AI companies, the government is likely to help Cohere, one of the country’s most well-known startups.
The company Cohere, which was started in 2019 and has its headquarters in Toronto, makes “large language models.” These are computer programmes that learn from a lot of data and can write text. While OpenAI has a partnership with Microsoft, the company has avoided exclusive deals with cloud providers, even though Oracle has backed them.
There isn’t as much money available for AI startups as there used to be, especially in their early stages. According to PitchBook, the value of venture capital deals for early-stage and seed-stage AI fell 76% to $122.9 million in the first quarter of this year, from a high point of $517.7 million in the third quarter of 2023. AI startups lose a lot of money because of the costs of training employees. However, each company is trying to sell its technology to the biggest companies that can pay for it and use it to make their work more efficient.
