Feds to invest up to $1.6 billion in Canadian AI company Cohere in its $7-billion fundraise

The federal government says it will invest up to $1.6 billion in Canadian artificial intelligence startup Cohere Inc. as part of the company’s planned $7-billion fundraising round, which is the largest-ever private capital raise in Canada.

The round will value Cohere at $35.7 billion, making it Canada’s most valuable private tech company.

Ottawa’s investment in Toronto-based Cohere comes alongside the release of its national security strategy, the first in more than two decades, which said Canada’s sovereignty depends on eight key sectors, including emerging technologies such as AI, critical minerals and defence.

“We’re not waiting for the future of AI to be decided somewhere else by those we don’t know or by whom we don’t trust. We are building it right here, the right way,” Prime Minister Mark Carney said in a speech on Thursday. “Cohere has grown from a Toronto startup into a global company. It’s a Canadian success story … and now, Canada has a stake in it,” he said.

The government is investing in Cohere on a commercial basis alongside Nvidia Corp., BCE Inc. and Germany’s Schwarz Group, which is leading the round, as well as others.

Carney said the investment will allow Cohere to create 1,000 new high-paying Canadian technical jobs and direct at least $1.7 billion in new computing infrastructure in the country by 2030. The agreement also ensures that Cohere will “stay Canadian,” he said.

The company will use the new funds to advance its large language models and AI tools made for business and government and invest in the infrastructure needed to train its models, Cohere chief financial officer Francois Chadwick said in a statement.

“We will continue to meaningfully scale across North America, EMEA, and APAC to meet growing customer demand,” he said.

Cohere in September completed its acquisition of German AI startup Aleph Alpha GmbH, which it said will create a well-positioned transatlantic AI “powerhouse” to scale its business in global markets.

Cohere has promoted its systems as alternatives to Big Tech systems and China’s open-source models as governments worldwide rush to advance their sovereign tech.

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