AI startup Cohere in talks to raise between $500 million to $1 billion in new funding, sources
Cohere, a Toronto-based AI startup specializing in AI foundation models, is currently in talks with investors to secure funding in the range of $500 million to $1 billion, according to an insider who shared the information with Reuters on Friday.
This news comes on the heels of an earlier report from The Financial Times, which stated that Cohere was in discussions with investors for new funding. However, Reuters notes that it was unable to ascertain the valuation in this round.
According to an insider familiar with Cohere’s capital-raising efforts, the Toronto-based startup is actively seeking funds. The primary objectives for these funds include the development of AI, recruitment of talent, and the expansion of sales activities, Reuters reported.
The fundraising initiative is part of the heightened investment activity in the AI sector, spurred by the success of the AI software application ChatGPT, which saw AI startups securing a significant portion of venture capital in the United States last year.
We covered Cohere back in June after the company raised $270 million from investors at a $2.2 billion valuation. Backers included renowned investors, including Nvidia, Oracle, and Salesforce Ventures.
In the competitive landscape, Cohere is vying with OpenAI, the creator of ChatGPT, and startup Anthropic. Cohere distinguishes itself by focusing on the business applications of AI, aiming to enhance professionals’ efficiency in their respective roles. For example, the company has highlighted its role in simplifying the search for infectious disease information for a specific business customer.
The spotlight on AI, particularly large language models like ChatGPT, was intensified due to their ability to generate diverse texts on demand. Executives attending the World Economic Forum’s annual meeting in Davos expressed a keen interest in exploring avenues to monetize AI.
Cohere’s capital raise aims to support the development of AI, talent acquisition, and the expansion of sales activities. The startup, established in 2019, has strategically made its technology available across multiple cloud platforms and has refrained from taking financing in the form of credits for its cloud usage, as disclosed by the anonymous source.
Cohere was founded in 2019 by former Google Alphabet researchers Aidan Gomez, Ivan Zhang, and Nick Frosst to harness the power of language understanding to generate, categorize, and organize text at a scale that was previously unimaginable. According to investors, the startup has quickly risen through the AI startup ranks given its intensive research background and close ties to Google.
In recent months, investors have poured billions of dollars into generative AI startups following the sudden success of OpenAI ChatGPT, an OpenAI dialogue-based AI chatbot that reached 100 million monthly active users in January just two months after its launch, making it the fastest-growing consumer application in history.
Foundation models are AI systems that are trained on large sets of data, with the ability to learn from new data to perform a variety of tasks. Generative AI aims to make human-like creations through computer code that has processed vast amounts of data.
Cohere has strategically positioned itself as a neutral provider, offering enterprises the opportunity to utilize models that are not tied to specific cloud providers such as Microsoft. By providing this flexibility, Cohere aims to empower businesses to leverage the power of foundation models without being locked into any particular cloud ecosystem.