Cohere, an AI startup, aims to raise $5 billion

Cohere, an AI startup, is in advanced talks to raise $500 million at a valuation of approximately $5 billion as it competes with OpenAI, the creator of ChatGPT.

According to a source who asked to remain anonymous in order to discuss sensitive topics, the Toronto-based company's annualized revenue run rate increased to $22 million this month from $13 million in December when it introduced the new model Command-R.

By developing AI models with an enterprise focus, the business, formed by former Google engineers, has demonstrated its growth potential to investors. Cohere, which presently partners with Oracle, intends to release its models to other significant cloud service providers. When Cohere secured $270 million from investors in June, including Nvidia, Oracle, and Inovia Capital, its valuation was estimated to be $2.2 billion. Its newly requested valuation was not previously disclosed.

According to Reuters in January, Cohere was seeking to raise between $500 million and $1 billion. According to the source, current investors will probably participate in the most recent investment round. If it is successful, it may be the most recent indication of investors' willingness to bet on the future adoption of AI models and fund AI firms at high valuations, even in the face of modest sales figures.

Foundation model companies have been racing to raise capital to fund the expensive development of AI models that require a huge amount of computing power and top industry talent.

While concentrating on corporate applications of AI, Cohere is in competition with OpenAI and Anthropic. With a $1 billion revenue forecast for 2024, OpenAI has raised over $10 billion from investors, including Microsoft. Major tech firms have also backed other AI laboratories, like Anthropic and Mistral.

Some venture capital investors are raising eyebrows because of the craze to fund AI labs that are losing money. They wonder if the foundation models will ever generate enough revenue to cover the enormous sums of money required to develop them.