Cohere, a Toronto-based artificial intelligence startup, is poised to secure a significant funding round, according to sources familiar with the matter. The company, known for developing foundation models to rival OpenAI's ChatGPT, is in discussions to raise $500 million, valuing the company at approximately $5 billion.
The potential funding comes as Cohere experiences impressive growth in its revenue. From December 2023, the company's annualized revenue run rate has surged from $13 million to $22 million, driven partly by the launch of its new model, Command-R.
Founded by former Google researchers, Cohere has positioned itself as an enterprise-focused AI model provider, catering to the needs of businesses seeking advanced AI solutions. The startup's partnership with Oracle underscores its commitment to expanding its reach beyond its current confines.
Cohere's valuation has been on a steady rise. In June 2023, the company was valued at $2.2 billion when it secured $270 million in funding from notable investors like Inovia Capital, Nvidia, and Oracle. The current valuation it seeks, however, marks a substantial increase from previous figures and reflects investors' confidence in its growth trajectory.
Reports from earlier this year indicated Cohere's intent to raise between $500 million to $1 billion, highlighting the substantial capital requirements of AI startups in the current landscape. Existing investors are expected to participate in the latest funding round, further signaling their belief in Cohere's potential.
The competition within the AI landscape is fierce, with Cohere vying against industry giants like OpenAI and Anthropic. While OpenAI has projected $1 billion in revenue for 2024 and has garnered significant investment from the likes of Microsoft, Cohere remains steadfast in its focus on business applications of AI.
Despite the enthusiasm from investors, questions linger regarding the sustainability of funding for AI labs. Some venture capitalists have raised concerns about the ability of foundation models to generate sufficient revenue relative to the substantial capital required for their development.
Cohere's pursuit of funding at a high valuation underscores the continued appetite for investing in AI startups. As the race for dominance in the AI landscape intensifies, Cohere's ability to secure substantial funding reflects both its potential and the broader trends driving investment in the industry.
