Artificial intelligence (AI) company Cohere Inc. is in the process of raising up to $250 million from a group of investors led by Inovia Capital. This could potentially bring the Toronto-based startup’s valuation to just over $2 billion, making it a major competitor to OpenAI, a well-known AI research company now owned by Microsoft Corp. The round of financing will also include Index Venture, Radical Ventures, and Thomvest Ventures, which backs the chairman of The Globe and Mail’s owner, Woodbridge Co. Ltd.
The proposed fundraising, which has been in the works since early 2020, marks an impressive amount of investment into Cohere, especially considering other Canadian tech companies are struggling to raise funds in a tumultuous market climate. As this wave of AI technology shakes up the landscape of tech company, more financial backers are being attracted to the field, investing nearly $10.7 billion in deals at the start of 2021.
Cohere was founded in 2019 by Aidan Gomez, Nicholas Frosst, and Ivan Zhang, all of whom had studied at the University of Toronto. Gomez is one of the earliest developers in a 2017 research paper that proposed a new method for computers to interpret language, which forms the basis of many current AI models. The company provides customers with access to its large language models (LLMs), which can be used to generate, summarize, and interpret text in order to power applications, such as chatbots and search engines.
The cash injection would assist Cohere to grow their software’s capabilities, giving them power to compete with other big players such as OpenAI, Anthropic, and Google parent company Alphabet Inc, who are all investing billions to develop their own AI technologies.
The risks of AI have been brought to the forefront by experts and notable AI researchers warning of a future of misinformation and existential threats brought on by these powerful technologies, such as possible job losses, invasion of privacy, unethical decision making and economic inequality. In fact, prominent AI researcher Geoffrey Hinton has recently resigned from his post at Google in order to speak freely without corporate constraints. He is also an early investor in Cohere.
This additional fundraising is a strong sign that the power of AI is continuing to gain investor interest, despite the gravitas of the potential risks and the need for balanced regulation. Even Salesforce’s chief corporate development and investments officer, John Somorjai, has admitted how “early in the development of these LLMs that it’s very unclear who the winners are, or who they will be.”
It is essential that Cohere follows through on their Switzerland strategy to appeal to customers by emphasizing their neutrality and lack of affiliation or control from data giants, so that companies and individuals can remain assured that their data is safe from outside access. However, it’s up to Cohere to prove that their models can be the key to solving real-world business issues and ultimately, increase their revenue significantly enough to meet their high valuation.
