Artificial intelligence start-up Cohere is close to securing $250mn in fresh funding from backers including Nvidia and Salesforce, which would represent the latest big investment into the generative AI sector that has boomed since the release of ChatGPT last year.
The fundraising round would give Cohere a post-money valuation of about $2bn, according to two people with direct knowledge of the advanced talks.
Toronto-headquartered Cohere is seeking the extra firepower as it competes in the increasingly crowded AI sector with deep-pocketed companies such as Microsoft, which has invested in OpenAI’s ChatGPT.
The investment was being led by Canadian venture capital fund Inovia Capital, with participation from Index Ventures, according to the people. Tiger Global, the technology-focused investment fund that led Cohere’s $125mn series B round last year, is not participating in the current round.
Venture investors are hopeful that a boom in generative AI will help them weather a broader tech downturn. The launch of the ChatGPT chatbot late last year has kicked off a frenzy of investment into generative AI companies, which can generate text, images or video from prompts. The result is in some cases indistinguishable from human output.
“A switch has flicked this year. We’re in the midst of a total transformation in every product or company on earth,” said Aidan Gomez, Cohere’s co-founder and chief executive.
Similar to OpenAI, Cohere is building a large language model capable of conversing with users, though the company is focusing its efforts on enterprise, rather than individual consumers.
Cohere lets partner companies use its models without having access to their data. “We don’t have access so they can put their very sensitive data in there,” said Gomez.
It had teamed up with the likes of Spotify, which uses its AI tool to improve podcast recommendations and search, and AI copywriting company Jasper, according to Gomez.
But it would not compete directly with OpenAI, said Gomez, a former Google researcher and co-author of a 2017 paper that paved the way for the generative AI breakthroughs that have occurred in the past six months.
“We won’t offer a consumer offering, we won’t compete with ChatGPT in that sense. They are very focused on consumer deployment and we’re much more focused on the enterprise,” he said.
Earlier this year, reports indicated Cohere was aiming to raise hundreds of millions of dollars at a valuation of more than $6bn.
But one person with knowledge of the talks said that those discussions had been in an “early” stage “with a few investors”. Another said the $6bn figure was “completely wrong”.
Inovia Capital did not immediately respond to a request for comment. Salesforce, Index Ventures and Nvidia declined to comment.
Additional reporting by Madhumita Murgia and Richard Waters
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