Cohere Secures $500M to Compete with Leading Generative AI Startups

Cohere, a generative AI startup co-founded by ex-Google researchers, has secured $500 million in new funding from investors including Cisco, AMD, and Fujitsu. This latest round, which also saw participation from Canadian pension investment manager PSP Investments and Canada’s export credit agency EDC, values the Toronto-based company at $5.5 billion. This valuation more than doubles Cohere’s worth from last June when it raised $270 million and brings its total funding to $970 million.

Growth and Expansion

Josh Gartner, head of communications at Cohere, stated that this financing will enable the company’s accelerated growth. "We continue to significantly expand our technical teams to build the next generations of accurate, data privacy-focused enterprise AI,” Gartner said. “Cohere is laser-focused on leading the AI industry beyond esoteric benchmarks to deliver real-world benefits in the daily workflows of global businesses across regions and languages.”

Fundraising Efforts

Earlier this year, Reuters reported that Cohere aimed to raise between $500 million and $1 billion in its next funding round, with Nvidia and Salesforce Ventures among the potential contributors. Both companies ultimately invested, as confirmed by Gartner.

Company Background

Cohere was launched in 2019 by Aiden Gomez, Nick Frosst, and Ivan Zhang, who had previously collaborated on research at FOR.ai, a precursor to Cohere. Gomez is notably one of the co-authors of the influential 2017 technical paper “Attention Is All You Need,” which laid the foundation for many modern generative AI models, including OpenAI’s GPT-4o and Stability AI’s Stable Diffusion.

Enterprise Focus

Unlike its generative AI startup competitors like OpenAI, Anthropic, and Mistral, Cohere does not focus on consumer applications. Instead, it customizes its AI models for enterprise clients, performing tasks such as document summarization, writing website copy, and powering chatbots for companies like Oracle, LivePerson, and Notion. Cohere’s AI platform is cloud agnostic, deployable in public clouds, a customer’s existing cloud, virtual private clouds, or on-site. The company works closely with clients to create tailored models based on their proprietary data.

Nonprofit Research and Open Models

Cohere also operates a nonprofit research lab, Cohere for AI, which releases open models like multilingual models for text understanding and analysis. Its latest flagship model, Command R+, offers many capabilities of more expensive models like GPT-4o at a lower cost.

Revenue and Market Strategy

Cohere’s strategy has proven successful, even as OpenAI and Anthropic increase their enterprise sales efforts. As of the end of March, Cohere was generating $35 million in annualized revenue, up from $13 million at the end of 2023, with a customer base of hundreds of companies.

Future Plans and Partnerships

Generative AI at Cohere’s scale is costly, especially as the company aims to develop more sophisticated systems. The new funding will support these efforts, as will Cohere’s ongoing partnership with Google Cloud, which provides the cloud infrastructure to train and run Cohere’s models. Cohere also maintains close ties with Oracle, an investor and customer, integrating its AI into many of Oracle’s software products, including Oracle NetSuite.

According to Bloomberg, Cohere plans to double its 250-employee headcount this year.