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Nvidia and Salesforce invest $450 million in AI startup Cohere, source says.

ByYasmeeta Oon

Jun 6, 2024
Nvidia and Salesforce invest $450 million in AI startup Cohere, source says.

Nvidia and Salesforce invest $450 million in AI startup Cohere, source says.

Canadian AI startup Cohere has secured $450 million in funding from returning investors such as Nvidia and Salesforce Ventures, as well as new investors including Cisco and Canadian pension fund PSP Investments, according to a source familiar with the matter.

  • Funding Amount: $450 million
  • Major Investors: Nvidia, Salesforce Ventures, Cisco, PSP Investments
  • Current Valuation: $5 billion (in ongoing talks)
  • Previous Valuation: $2.2 billion (June 2023)
  • Revenue Growth: $35 million annualized revenue by March 2024, up from $13 million last year

Cohere’s Funding and Valuation Overview

Funding RoundAmount RaisedKey InvestorsValuationRevenue Growth
Current$450 millionNvidia, Salesforce, Cisco, PSP Investments$5 billion (ongoing)$35 million (2024)
Previous (2023)Not specifiedInovia Capital$2.2 billion$13 million (2023)

Cohere has successfully concluded the first tranche of its months-long fundraising efforts, securing $450 million from a blend of returning and new investors. According to a source, the company is still in discussions to raise additional funds within the same round, potentially reaching a valuation of $5 billion. This marks a significant leap from its last private valuation of $2.2 billion, achieved in June 2023 with investments from Inovia Capital.

Cohere, specializing in generative AI, monetizes its technology by selling models and applications to enterprises, with a strong emphasis on data privacy. The company reported $35 million in annualized revenue by the end of March 2024, a substantial increase from $13 million the previous year. Cohere’s growth trajectory highlights the increasing demand for AI solutions that prioritize privacy and data security.

Despite Cohere’s impressive achievements, the company has chosen not to comment on the recent funding news. Similarly, Nvidia and Salesforce have yet to respond to requests for comment.

Cohere’s ambition to raise between $500 million to $1 billion, as previously reported by Reuters, places it in direct competition with other leading AI firms like OpenAI, Anthropic, and Mistral. These companies have also attracted substantial investments from strategic players such as Microsoft, Google, and Amazon, indicating a highly competitive landscape for AI funding.

The foundation model AI companies, including Cohere, are in a race to secure capital to support the expensive development of AI models, which require significant computational power and access to top industry talent. This intense competition is driving a wave of funding activity within the sector, although there are signs of a slowdown, particularly in early-stage investments.

Comparison of AI Funding Rounds

CompanyRecent Funding AmountKey InvestorsNotable Competitors
Cohere$450 millionNvidia, Salesforce, Cisco, PSP InvestmentsOpenAI, Anthropic, Mistral
OpenAIBillionsMicrosoftCohere, Anthropic, Mistral
AnthropicBillionsGoogleCohere, OpenAI, Mistral
MistralBillionsAmazonCohere, OpenAI, Anthropic

One of the most high-profile Canadian startups, Cohere stands to benefit significantly from the Canadian government’s commitment to invest C$2.4 billion ($1.77 billion) in compute and AI research for domestic AI companies. This strategic investment is expected to provide a substantial boost to Cohere’s development capabilities and market position.

Founded in 2019 and headquartered in Toronto, Cohere focuses on building large language models. These software systems, trained on extensive datasets, have the capability to generate text, positioning Cohere as a key player in the generative AI space. Unlike OpenAI’s exclusive partnership with Microsoft, Cohere has avoided tying itself to a single cloud provider, maintaining flexibility despite its backing from Oracle.

AI startups, including Cohere, often face challenges related to high training costs, which can lead to financial losses. However, demonstrating revenue growth and technological advancements remains crucial for securing additional capital and achieving long-term success. Cohere’s recent revenue growth is a positive indicator of its market potential and attractiveness to investors.

  • Data Privacy Focus: Emphasis on data privacy sets Cohere apart in the enterprise market.
  • Government Support: Likely to benefit from substantial Canadian government investment in AI research.
  • Flexible Partnerships: Avoids exclusive cloud deals, providing strategic flexibility.
  • Revenue Growth: Significant increase in annualized revenue, reflecting strong market demand.
  • Competitive Edge: Positioned as a leading Canadian AI startup with high-profile investor backing.

The funding landscape for AI startups is showing signs of a slowdown, especially in the early stages. According to PitchBook data, venture capital deal value for pre-seed and seed-stage AI deals dropped by 76% in the first quarter of 2024, down to $122.9 million from a peak of $517.7 million in the third quarter of 2023. This trend indicates a more cautious approach from investors, focusing on more mature and promising AI ventures.

Despite the cooling funding environment for early-stage startups, established companies like Cohere continue to attract significant investment. This trend underscores the importance of demonstrating tangible progress and market viability to secure funding in a competitive and evolving industry.

Cohere’s recent $450 million funding round underscores its position as a leading player in the AI industry. With strong investor support and substantial revenue growth, Cohere is well-positioned to capitalize on the growing demand for AI solutions that prioritize data privacy. As the company continues its fundraising efforts and leverages government support, it remains a key contender in the competitive landscape of generative AI.

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Featured Image courtesy of DALL-E by ChatGPT

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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