AI startup Cohere seeks $5 billion valuation in latest fundraising round

AI startup Cohere: Cohere, an artificial intelligence startup specialising in foundation models to compete with ChatGPT creator OpenAI, is reportedly in advanced discussions to secure $500 million in funding at a valuation of approximately $5 billion, according to a source familiar with the matter.

The Toronto-based company has experienced notable growth in its annualised revenue run rate, soaring from $13 million in December to $22 million this month, driven by the launch of its new model Command-R.

Founded by former Google researchers, Cohere has been stressing upon its growth potential to investors by developing enterprise-focused AI models. 

The startup, which has an existing partnership with Oracle, intends to make its models accessible on other major cloud platforms as well.

Previously valued at $2.2 billion last June, following a $270 million funding round involving investors such as Inovia Capital, Nvidia, and Oracle, Cohere now seeks a higher valuation, marking an unprecedented leap in its worth.

While existing investors are expected to participate in the latest funding round, this move underscores investors' willingness to support AI startups at major valuations, notwithstanding moderate revenue figures, as they bank on the future adoption of AI models.

Cohere faces competition from entities like OpenAI and Anthropic, although its focus remains on business applications of AI. 

The race to secure funding among foundation model companies reflects the significant financial investment required for the development of AI models, which demand notable computing power and top-tier industry talent.

Despite concerns from some venture capital investors regarding the profitability of foundation models relative to the considerable capital investment needed for their development, the industry's enthusiasm to support loss-making AI labs remains robust.

The latest development underlines the growing prominence of AI startups in the tech landscape and the escalating competition within the sector as companies vie for dominance in the rapidly evolving AI market.

(With Reuters Inputs)