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Cohere Inc. Emerges as One of World's Most Valuable AI Startups
Artificial intelligence startup Cohere Inc. has rapidly ascended to become one of the most valuable AI companies globally, and it's now among the largest startups in Canada. Unlike some of its competitors in Silicon Valley, Cohere's success isn't built on consumer-facing apps that generate poems, drawings, or homework assistance. Instead, Cohere, based in Toronto, specializes in creating and customizing large language models (LLMs) for businesses. These models, trained on extensive online content, are designed to analyze and generate text.
$5.5 Billion Valuation and Significant Funding Round
Cohere's recent funding round valued the company at $5.5 billion. This valuation was achieved without the flash typically associated with consumer apps. Cohere's technology has drawn hundreds of clients, including Notion Labs Inc. and Oracle Inc., which utilize the AI to generate website copy, communicate with users, and integrate generative AI features into their products.
On Monday, Cohere plans to announce that it has raised $500 million in a Series D funding round. PSP Investments, a Canadian pension investment manager, led this round, with additional investments from entities such as Cisco Systems Inc., Fujitsu, AMD Ventures, and Canada’s export credit agency EDC. This infusion of capital more than doubles its valuation from the previous year when it raised $270 million.
Challenging Competitive Landscape
The funding arrives at a time when the venture capital market is highly competitive, especially in AI development. Cohere is one of the few startups that develop massive LLMs from scratch, a feat that is both costly and complex. Its primary competitors include OpenAI, Anthropic, and Google. However, Cohere distinguishes itself by focusing on practical software solutions for enterprises rather than pursuing the broader, more ambitious goal of artificial general intelligence (AGI), as stated by OpenAI.
Practical Enterprise Solutions
Founded in 2019, Cohere is led by co-founder Aidan Gomez, who has made significant contributions to the AI field, including co-authoring the influential paper “Attention Is All You Need.” This spring, the company launched its most robust model yet, Command R+, which is positioned to compete with OpenAI’s offerings at a lower cost.
As of late March, Cohere was generating $35 million in annualized revenue, a substantial increase from $13 million at the end of 2023. The company, which began the year with approximately 250 employees, plans to double its workforce by the year's end.
Expanding Customer Base and Practical Applications
The capabilities of LLMs have evolved rapidly, and public interest peaked with the introduction of OpenAI’s ChatGPT in late 2022. Cohere has diligently worked to make its technology useful and stay ahead of these advancements. The company has customers from various industries, including banking, technology, and retail. A notable customer, Toronto-Dominion Bank, uses Cohere’s AI for document-based queries. Another example is a luxury consumer brand using Cohere’s virtual shopping tool to help employees recommend products to customers.
An intriguing application of Cohere's technology comes from Borderless AI, a startup using Cohere’s models to answer intricate employment law questions in multiple languages. Cohere’s language models support ten languages, including English, Spanish, Chinese, Arabic, and Japanese, and can cite sources in their responses.
Global Expansion with Canadian Roots
Guillermo Freire of EDC notes that Cohere’s ability to operate across multiple languages significantly attracted the agency's interest. EDC aims for its investment to assist Cohere in expanding internationally while maintaining its base in Canada. Cohere has established offices in key locations such as San Francisco and London but plans to remain headquartered in Toronto.
"Toronto's been a great place to build a global company," stated Nick Frosst, one of Cohere's co-founders.
