Artificial intelligence startup Cohere is close to securing $250 million in new funding from backers including Nvidia and Salesforce, which will mark the latest major investment in the generative AI sector that has boomed since the release of ChatGPT last year.
The fundraising round will give Queer a post-money valuation of about $2 billion, according to two people with direct knowledge of the advanced talks.
Toronto-based Cohere is seeking additional firepower as it competes in an increasingly crowded AI sector with deep-pocketed companies like Microsoft, which has invested in OpenAI’s ChatGPT.
The investment was led by Canadian venture capital fund Inovia Capital, with participation from Index Ventures, according to the people. Tiger Global, the technology-focused investment fund that led Cohere’s $125 million Series B round last year, is not participating in the current round.
Venture investors are hoping that the boom in generative AI will help them weather the broader technology downturn. The launch of ChatGPT chatbot late last year sparked a wave of investment in AI generator companies, which can generate text, images or videos from prompts. The result is in some cases indistinguishable from human output.
“The switch has been made this year. We are in the midst of a total transformation of every product or company on earth,” said Aidan Gomez, co-founder and CEO of Cohere.
Similar to OpenAI, Cohere is building a large language model capable of conversing with users, though the company is focusing its efforts on enterprises, rather than individual consumers.
Cohere allows partner companies to use their models without accessing their data. “We don’t have access so they can put their very sensitive data there,” Gomez said.
It has teamed up with the likes of Spotify, which uses its AI tool to improve podcast recommendations and search, and AI writing company Jasper, according to Gomez.
But it won’t directly compete with OpenAI, said Gomez, a former Google researcher and co-author of a 2017 paper that paved the way for the generative AI breakthroughs that have occurred in the past six months.
“We are not going to offer to consumers, and we are not going to compete with ChatGPT in that sense. They are very focused on consumer publishing and we are much more enterprise focused.”
Earlier this year, reports indicated that Cohere was aiming to raise hundreds of millions of dollars at a valuation of more than $6 billion.
But one person familiar with the talks said those discussions were at an “early” stage “with a few investors”. Another said the $6 billion figure was “totally wrong”.
Inovia Capital did not immediately respond to a request for comment. Salesforce, Index Ventures and Nvidia declined to comment.
Additional reporting by Madhumita Murgia and Richard Waters