Canadian AI startup Cohere has successfully secured $450 million in a funding round led by returning investors Nvidia and Salesforce Ventures, alongside new investors such as Cisco and Canadian pension fund PSP Investments, according to a source familiar with the matter.
This funding round marks the first tranche of Cohere’s ongoing fundraising efforts, with the company still in discussions to raise additional funds at a valuation of $5 billion, the source, who requested anonymity, revealed. This new valuation represents a significant increase from Cohere’s last private raise, where it was valued at $2.2 billion by investors including Inovia Capital in June 2023.
Cohere, a generative AI company that monetizes by selling its models and applications to enterprises with a strong focus on data privacy, saw its annualized revenue grow to $35 million by the end of March, up from $13 million the previous year, the source added. The company, Nvidia, and Salesforce declined to comment on the development.
Previously reported by Reuters, Cohere aimed to raise between $500 million and $1 billion. Competing with industry giants like OpenAI, Anthropic, and Mistral, which have secured substantial investments from Microsoft, Google, and Amazon, Cohere is part of the fierce race among foundation model AI companies to attract capital for the expensive development of AI models requiring extensive computing power and top-tier talent.
As one of Canada’s most prominent startups, Cohere stands to benefit from the Canadian government’s commitment to invest C$2.4 billion ($1.77 billion) to support computing and AI research for domestic AI companies. Founded in 2019 and headquartered in Toronto, Cohere specializes in building large language models—software systems trained on vast datasets to generate text. Unlike OpenAI’s exclusive partnership with Microsoft, Cohere has avoided exclusive cloud provider deals, despite being backed by Oracle.
While many AI startups remain unprofitable due to the high costs of training AI models, companies are striving to sell their technologies to large enterprises willing to invest in enhanced productivity. Demonstrating revenue growth is crucial for these startups to secure additional capital.
The fervor for AI startup funding has shown signs of slowing, particularly at the early-stage level. Venture capital deal value for pre-seed and seed-stage AI investments dropped by 76% in the first quarter of this year to $122.9 million, down from a peak of $517.7 million in Q3 2023, according to PitchBook data.
