Cohere, an emerging artificial intelligence startup based in Toronto, is on the brink of securing $500 million in a funding round that would value the company at approximately $5 billion, Reuters news report said.
Cohere, founded by former Google researchers, has witnessed a substantial growth trajectory, with its annualized revenue run rate surging to $22 million this month from $13 million in December. This growth coincided with the launch of its latest model, Command-R, which has garnered significant attention in the AI landscape.
Cohere’s strategic focus on enterprise-oriented AI models has been pivotal in attracting investors. The startup, which has an existing partnership with tech giant Oracle, plans to expand its reach by making its models available on other major cloud platforms.
In June last year, Cohere achieved a valuation of $2.2 billion following a successful funding round that raised $270 million from prominent investors including Inovia Capital, Nvidia, and Oracle. The current funding round, aiming for a higher valuation, signals the company’s continued growth and investor confidence in its potential.
Reuters previously reported in January that Cohere was seeking to raise between $500 million to $1 billion. The upcoming funding round is expected to witness participation from existing investors, further bolstering Cohere’s financial position.
Despite moderate revenue numbers, the demand for AI startups, particularly those specializing in foundation models, remains strong among investors. These firms are betting on the widespread adoption of AI models in various industries, driving future revenue growth.
Cohere competes directly with industry giants like OpenAI and Anthropic, with a focus on business applications of AI. OpenAI, for instance, has projected revenue of $1 billion in 2024 and has received substantial investments, including from tech titan Microsoft.
However, the frenetic pace of funding for AI startups has raised concerns among some venture capital investors. Questions loom regarding whether foundation models will generate sufficient revenue to justify the substantial capital required for their development.
