Canadian AI startup Cohere secures $450 million in funding from key investors like Nvidia (NASDAQ:NVDA) and Salesforce Ventures (NYSE:CRM), alongside Cisco (NASDAQ:CSCO) and PSP Investments, in the first tranche of a larger round aimed at a $5 billion valuation, according to a source familiar with the matter.
This latest funding round marks a significant increase in Cohere’s valuation from its previous raise last June, reflecting its rapid growth and market potential. The generative AI company, specializing in data privacy-focused models and applications for enterprises, saw its annualized revenue surge to $35 million by March, up from $13 million the previous year.
While Cohere refrained from commenting on the funding, key investors like Nvidia and Salesforce have yet to respond to requests for comment. The startup competes with industry giants like OpenAI, Anthropic, and Mistral, attracting strategic investments from major players such as Microsoft, Google, and Amazon.
Founded in 2019 and based in Toronto, Cohere focuses on developing large language models trained on extensive datasets to generate text. Unlike some competitors, Cohere has avoided exclusive deals with cloud providers, despite backing from Oracle.
The funding round comes amid the Canadian government’s plan to invest $1.77 billion in computing and AI research, positioning Cohere to leverage this support for its continued growth and innovation.
While AI startups face significant training costs and profitability challenges, the race to sell technology to major corporations for enhanced productivity remains intense. Demonstrating revenue growth is crucial for startups to attract further investment, particularly as the funding frenzy in the AI sector begins to taper, with early-stage deal values declining significantly in the first quarter of this year.
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