Cohere, an artificial intelligence company, has raised $500mn through a new round of funding, making it the most valuable start-up in the world. This will help the Canadian firm to compete with rivals such as OpenAI and Anthropic.
The funding round values Cohere $5.5bn. Cohere was founded by former Google researchers in 2019. It is fiercely competing with bigger rivals for lucrative contracts from companies scrambling AI in their businesses.
Capital was allocated to “new models, computing power and headcount”. Josh Gartner is a spokesperson from Cohere. It has plans to double the number of employees to 500 by this year.
It was reported that Cohere was raising capital with a target of between $500mn and $1bn.
Cohere, unlike its larger competitors, has not created an AI chatbot aimed at consumers. It has instead courted enterprise clients for its AI models. Cohere’s best-performing large language model, which is a Cohere exclusive, costs less to build, train, and run.
The company is still a fraction of the size OpenAI which has been valued at over $90bn, and raised more than $10bn from 2019 to date, and Anthropic which raised $7bn between 2023 and 2018. Anthropic’s most recent valuation was close to $20bn.
Cohere founders Aidan Gomez and Nick Frosst, along with Ivan Zhang, are also taking Google on, who has developed their own suite of enterprise AI product.
The company raised $270mn last June. The company’s return to investors in less than a month shows the rapid pace of growth in a market that has grown more competitive ever since OpenAI launched its ChatGPT chatbot on November 20, 2022.
Investors are more interested than ever in seeing evidence that their bets on AI will pay off one day. Many claim that recent AI advances represent a “platform shift” in technology. However, developing cutting-edge AI models is expensive. Therefore, start-ups need to strike lucrative deals with Big Tech Partners — like OpenAI did with Microsoft and Anthropic did with Google and Amazon.
According to someone with knowledge of the company’s growth, Cohere revenues, on an annualized basis, reached $35mn in march, nearly trebling since $13mn by the end of 2023.
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