AI startup Cohere raises $500 million in funding at $5.5 billion valuation

Cohere, a generative AI startup co-founded by former Google researchers, has secured $500 million in its latest funding round, making it one of the most valuable AI companies globally.

This fresh capital infusion came just four months after reports that the 5-year-old startup Cohere was in talks to raise $500 million at a $5 billion valuation.

The latest round was backed by major players like Cisco, AMD, and Fujitsu, with participation from Canadian pension manager PSP Investments and Canada’s export credit agency EDC. The round pushes the Toronto-based Cohere valuation to $5.5 billion, according to Bloomberg.

This valuation more than doubled its previous figure from June 2023, when it raised $270 million from Inovia Capital and other investors, bringing its total funding to $970 million.

“In a new funding round, Cohere was valued at $5.5 billion, vaulting it to the upper echelons of global startups. It landed there without a consumer app that writes poems, draws pictures or helps with homework.” Bloomberg reported.

Unlike its peers, such as OpenAI’s ChatGPT, Cohere hasn’t made waves with a viral chatbot but has instead attracted hundreds of corporate clients. Cohere’s strategy of focusing on enterprise-grade AI models has positioned it uniquely within the AI landscape, securing partnerships with tech giants like Oracle to ensure its models are accessible across major cloud platforms.

Cohere was reportedly in discussions with Nvidia and Salesforce Ventures for this funding round, and both companies eventually contributed, as confirmed by Gartner to TechCrunch. An insider revealed that Cohere’s annualized revenue run rate soared from $13 million in December to $22 million this month, driven by its revolutionary model, Command-R.

Founded by ex-Google researchers, Cohere’s ascent is marked by its focus on enterprise applications, setting it apart from competitors like OpenAI and Anthropic. OpenAI, for instance, is projecting $1 billion in revenue for 2024 and has amassed over $10 billion in investments, primarily from Microsoft. Meanwhile, other AI labs, including Anthropic and Mistral, continue to attract significant backing from industry heavyweights.

However, the aggressive funding race among AI labs has sparked concerns among some venture capitalists about the sustainability of these startups’ revenue models relative to their capital requirements. Despite these concerns, Cohere’s remarkable revenue growth highlights the transformative potential of AI startups to disrupt traditional industries and spearhead innovation in the years ahead.

As existing investors gear up to participate in the upcoming funding round, their continued support underscores a strong belief in Cohere’s vision and potential. This latest development mirrors the broader trend within the AI startup ecosystem, where high-valuation ventures continue to draw significant investor interest, reflecting the enduring confidence in the transformative power of AI technologies.