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Exclusive: AI company Cohere seeks $5 billion value in fresh funding

Figurines with computers and cellphones are shown in front of the words "Artificial Intelligence AI" in this image shot, February 19, 2024

March 20 (mod1s) - Cohere, an artificial intelligence business that creates foundation models to compete with ChatGPT developer OpenAI, is in advanced negotiations to fund $500 million at a value of approximately $5 billion, according to a source familiar with the situation. 

The Toronto-based firm has seen its yearly revenue run rate jump to $22 million this month from $13 million in December when it debuted new model Command-R, said the person, who asked anonymity to discuss sensitive concerns.

The business created by former Google researchers has presented its growth potential to investors by constructing enterprise-focused AI models. Cohere, which currently has a collaboration with Oracle (ORCL.N), opens new tab, also aims to make its models accessible on other major cloud providers. 

Cohere was valued at $2.2 billion in June when it received $270 million from investors including Inovia Capital, Nvidia (NVDA.O), opens new tab and Oracle. The new value it is seeking had not been revealed earlier.

Reuters in January said Cohere was trying to raise roughly $500 million to $1 billion. 

Existing investors are expected to join the next investment round, the person noted. 

If successful, it might be the latest example of investors' desire for investing AI businesses at high valuations despite weak revenue data, as they gamble on the future adoption of AI models. 

Foundation model businesses have been rushing to seek cash to support the pricey creation of AI models that demand vast amount of processing power and top industry personnel.

Cohere is competing with OpenAI and Anthropic, while concentrating on commercial uses of AI. 

OpenAI has forecast $1 billion in revenue in 2024, and received more than $10 billion from investors including Microsoft (MSFT.O), opens new tab. Other AI laboratories, such as Anthropic and Mistral, have also gained financing from prominent tech corporations. 

The drive to finance loss-making AI laboratories has raised suspicions among some venture capital investors who doubt whether the foundation models can ever earn enough income compared to the large amount of cash required to build them. 

The Information originally published Cohere's December revenue run rate on Wednesday.


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