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Artificial intelligence developer Cohere has raised $500mn in a new funding round, making it one of the world’s most valuable start-ups in the field, boosting the Canadian company’s efforts to take on rivals including OpenAI and Anthropic.
The funding round values Cohere at $5.5bn. Founded by ex-Google researchers in 2019, it is in fierce competition with larger rivals to secure lucrative contracts with companies scrambling to build AI into their businesses.
The capital was “going towards new models, [computing power] and headcount. It continues the momentum we have,” said Josh Gartner, a spokesperson for Cohere. It plans to double its staff to about 500 this year.
The funding came from a mixture of new and existing investors, including Canadian pension investment manager PSP Investments, Nvidia, Oracle, Salesforce Ventures and Fujitsu. The Financial Times reported in January that Cohere was raising capital and targeting between $500mn-$1bn.
Unlike larger rivals, Cohere has not developed an AI chatbot for consumers. Instead, it has courted enterprise customers for its AI models. Thanks to its narrower focus, Cohere’s top-performing large language model is cheaper to build, train and run than those of its rivals.
The company remains a fraction the size of OpenAI, which is valued at close to $90bn and has raised well over $10bn since 2019, and Anthropic, which raised more than $7bn in a funding frenzy between 2023 and this year. Anthropic was most recently valued at close to $20bn.
Cohere’s founders Aidan Gomez, Nick Frosst and Ivan Zhang are also taking on Google, which has developed its own suite of enterprise AI products.
The company raised $270mn in June last year. Its return to investors after little more than a year underscores the aggressive pace of development in a sector that has become far more competitive since the landmark launch of OpenAI’s ChatGPT chatbot in November 2022.
More than 18 months on, investors are increasingly keen to see evidence that their big bets will one day pay off. Many argue that recent AI breakthroughs amount to a technological “platform shift”, but developing cutting-edge models is hugely costly, meaning start-ups must strike lucrative deals with Big Tech partners — as OpenAI has done with Microsoft and Anthropic has done with Google and Amazon — or quickly increase revenue.
Cohere’s revenues on an annualised basis hit $35mn in March, almost trebling from $13mn at the end of 2023, according to a person with knowledge of its growth.
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