Ottawa just helped Cohere become the most valuable private tech company in Canada.
What happened: The federal government is taking an equity stake in AI lab Cohere, contributing up to $1.6 billion to the company’s latest funding round. The raise, which values Cohere at $35.7 billion, marks the largest financing round for a startup in Canadian history.
Also included in the funding round were Nvidia, Bell Canada’s VC arm, and German retail conglomerate Schwarz Group.
Catch-up: The new valuation caps a year of wild growth for Cohere, which was valued at just ~$9.8 billion last September. In the last two months, Cohere expanded its European footprint, signing a merger with Germany’s Aleph Alpha and agreeing to buy Czech AI cybersecurity firm Aisle.
Why it matters: Ottawa has made it a priority to build up Canada’s sovereign AI capabilities, looking to reduce the country’s reliance on U.S. tech giants. While they weren’t exactly flush with options, Cohere appears to be the horse that the feds are backing to make that happen.
As Mark Carney said yesterday, “The most powerful AI systems are concentrated in a very small number of companies, in a very small number of countries. That concentration carries risks: to cost, to resilience and to sovereignty.”
Carney has also pointed out (kind of a humble brag) that Canada is now one of only four countries in the world that have their own large language model developer.
Bottom line: It may not have the resources to compete directly with OpenAI or Anthropic, but Cohere has carved out a nice niche catering to data-sensitive businesses, like defence contractors, banks, and government agencies. With fears growing over rogue agents and cyberattacks, the Canadian lab could very well position itself as the safe AI option.—LA
