Cohere raises $500 Million in Series D

The OpenAI of 🍁 Canada is as you might expect, ethical and unprofitable.

Hey Everyone,

Cohere is like an “OpenAI of Canada” on a much smaller scale focusing mostly on Enterprise AI.

How will the OpenAI of Canada Survive?

Their CEO is Aiden Gomez who trained with Geoffrey Hinton and Łukasz Kaiser on the Google Brain team. Toronto has an okay pedigree for AI talent due to the good Universities around there especially Waterloo University.

About a week ago, the Toronto-based generative artificial intelligence (AI) startup Cohere has topped up and officially closed its Series D round, raking in $500 million USD at a $5.5 billion valuation ($687 million CAD at $7.6 billion).  

Cohere is to Canada as Aleph Alpha is to Germany, Mistral is to France or AI21 Labs is to Israel. They are part of a Sovereign AI movement that will be funded in part by their Governments to keep them alive. The round, had notable participation from Canadian pension investment manager PSP Investments and Canada’s export credit agency EDC. These frontier model builders tend to have trouble generating actual revenue.

As of the end of March, Cohere, a Canadian AI startup, was generating just $35 million in annualized revenue, a significant increase from $13 million the previous year. The company, co-founded by ex-Google researchers, focuses on providing AI models to enterprises, emphasizing data privacy. How could a startup only generative a few million per year have a valuation of $5.5 Billion?

Cohere does have backing by Nvidia. We have to view Cohere as a Google Brain spin-off. Josh Gartner, head of communications at Cohere, said the financing sets Cohere up for “accelerated growth.” A rough estimate would be that Cohere now as of the Summer of 2024, generates perhaps $85 million in revenue with a 554-person team. How do regional VCs and Governments keep these smaller research labs alive in an era of Google, OpenAI, Microsoft and Meta spending so much?

Cohere also has backing from Salesforce and the likes of Cisco and like one might expect for that region, Inovia Capital. Surprisingly AMD Ventures is also in on the mix in the Series D.