Ottawa buys stake in Cohere in funding round valuing AI company at $35.7-billion

Cohere Inc. has secured most of a planned $7-billion financing, including backing from the federal government, in a deal that would value the Toronto-based AI company at $35.7-billion.

The financing is the largest by a Canadian startup in history, and once completed, would make Cohere the country’s most valuable privately held technology company.

The round was led by German retail giant Schwarz Group and includes funding from Bell Canada’s venture arm and Luxembourg-based Bullhound Capital, Cohere said in a news release on Thursday.

As part of the deal, the Canadian government is taking an equity stake in the company, part of Ottawa’s strategy to build out and secure the country’s AI strengths and economic sovereignty.

Returning backers that have committed to the financing include chip giant Nvidia Corp., Montreal’s Inovia Capital, and Prosperity7 Ventures, an arm of Saudi Aramco.

Cohere chief financial officer Francois Chadwick said in an interview that the financing is necessary for the company to invest in compute infrastructure, develop its AI models and expand globally. He added that Cohere has made a number of commitments related to hiring and investing in Canada as part of the government’s investment.

“Canada needs to be there at the forefront,” Mr. Chadwick said. “Instead of having two global leaders – China and the U.S. – Canada becomes a global leader in the AI world.”

The Globe and Mail first reported last month that Cohere had told investors it was in advanced talks to raise as much as US$3-billion, including financing from the Canadian and German governments, at a valuation of US$20-billion.