Cohere, a start-up in artificial intelligence, is on the verge of securing new funding worth $250mn from investors such as Nvidia and Salesforce. This would be the latest major investment made into the generative AI industry that has exploded since the release last year of ChatGPT.
According to two people who have direct knowledge of the talks, Cohere’s valuation would be around $2bn after money.
Toronto-headquartered Cohere is seeking the extra firepower as it competes in the increasingly crowded AI sector with deep-pocketed companies such as Microsoft, which has invested in OpenAI’s ChatGPT.
According to people, the investment was led by Canadian Venture capital Fund Inovia Capital with participation from Index Ventures. Tiger Global, a technology-focused fund that led Cohere’s $125mn Series B round last summer, will not be participating in this round.
Venture investors hope that a boom of generative AI can help them weather the broader tech recession. Launch of the ChatGPT bot late last year sparked a frenzy in investment for generative AI firms, which can create text, images, or videos from prompts. In some cases, the output is virtually identical to human-produced content.
This year, a switch was flipped. “We’re in a period of total transformation for every company or product on the planet,” said Aidan Gomez.
Cohere, like OpenAI, is developing a large language-model capable of conversing to users. However, the company focuses its efforts more on enterprises than consumers.
Cohere allows partners to use its models, without having access their data. Gomez said, “We do not have access to their data so they can put very sensitive information in there.”
According to Gomez, it had partnered with Spotify, which uses AI to improve search and podcast recommendations, as well as AI copywriting firm Jasper.
Gomez, former Google researcher, and co-author a 2017 article that laid the groundwork for the breakthroughs in generative AI that occurred over the last six months, explained that OpenAI would not be directly competing with it.
We won’t be competing with ChatGPT on the consumer side. He said that they are focused on consumer deployment, while we are more focused on enterprise.
Early this year reports stated that Cohere aimed to raise hundreds and millions of dollars with a valuation exceeding $6bn.
One person who was privy to the discussions said that they were in an “early stage” and “with only a few investors”. One person said that the $6bn figure is “completely incorrect”.
Inovia Capital didn’t immediately respond to an inquiry for a comment. Nvidia, Index Ventures, and Salesforce declined to comment.