Cohere, an artificial intelligence startup developing foundation models to compete with ChatGPT creator OpenAI, is in advanced talks to raise $500 million at a valuation of about $5 billion, according to a person familiar with the matter.
The Toronto-based company saw annual sales rise to $22 million this month from $13 million in December as it launched a new Command-R model, said the source, who requested anonymity to discuss confidential matters.
Founded by ex-Google researchers, the startup has demonstrated its growth potential to investors by building AI models aimed at businesses. Cohere, which currently has a partnership with Oracle, also plans to make its models available with other major cloud providers.
Cohere was valued at $2.2 billion last June when it raised $270 million from investors including Inovia Capital, Nvidia and Oracle. The new award he is seeking has not been previously announced.
Existing investors are likely to participate in the latest round of funding, the source added.
If successful, it could be the latest sign of investors’ appetite to fund high-value AI startups despite modest sales as they bet on future adoption of AI models.
Foundation model companies have been racing to raise capital to fund the expensive development of AI models, which require massive amounts of computing power and top industry talent.
Cohere competes with OpenAI and Anthropic, focusing on business AI applications.
OpenAI projected $1 billion in revenue by 2024 and has raised more than $10 billion from investors including Microsoft. Other AI labs such as Anthropic and Mistral have also attracted support from major tech companies.
The craze to fund loss-making AI labs has raised eyebrows among some venture capitalists, who question whether foundation models will ever earn enough revenue given the huge amount of capital needed to develop them.
