If you were surprised by this week’s whopping federal investment in Canadian AI darling Cohere, you haven’t been paying attention—or reading enough BetaKit.
It’s been a year since Minister of Industry Mélanie Joly declared, “We will build Cohere, and we will make it a Canadian champion,” signalling a dramatic shift in policy and tone under Prime Minister Mark Carney. This summer, the feds’ AI strategy confirmed their intent to help scale the country’s most promising AI firms by taking stakes in them. This week, the federal government cut the cheque.
The $1.6 billion CAD commitment to Cohere likely represents its largest-ever federal equity investment in a single private tech company. That amount, part of a larger, planned Series E round, is triple the size of the similarly-purposed Canadian Tech Growth Fund, and nearly equal to the envelope the feds recently promised to all of Canadian VC.
The feds’ fund manager turn has touched a nerve, with takes flying from across the spectrum of Canadian society. Tech leaders and nationalists have publicly celebrated the transaction as a win for both the AI model maker and Canada’s sovereign tech ambitions. Policy wonks have questioned the decision to place such a big bet on Cohere, and whether government should even be picking winners in the first place. VCs I’ve spoken with still have lots of questions about the terms of the deal, from what milestones Cohere must hit to what control mechanisms the deal gives the feds. Meanwhile, the average Canadian—much like with the AI strategy—is wondering what this means for the average Canadian.
The intense reaction is unlikely to die down anytime soon. AI Minister Evan Solomon told BetaKit that equity investments won’t be a one-off. This government has made it abundantly clear that it’s willing to play a direct role in creating national tech champions. Selling that strategy to constituents will take more work now that Canadians suddenly have skin in the game.
Josh Scott,
Toronto reporter
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Who’s cashing in, or out, this week:
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- Legaltech firm Clio acquired AI-powered government relations software Page, among other reveals at its annual ClioCon conference. (Burnaby/Kitchener-Waterloo)
- Loon cleared a key regulatory hurdle to issue and distribute CADC, its Canadian dollar-backed stablecoin. (Calgary)
- Symx.ai raised $6 million USD and struck a partnership with Yokohama, marking a new stage in its industrial AI push. (Sudbury)
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- American defence contractor Lockheed Martin signed a $10-million contract with industrial AI company Contextere. (Ottawa)
- Telesat reported Q3 losses as the satellite company offered “no assurances” on its ability to pay back its soon-due debt. (Ottawa)
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Feature image courtesy Madison McLauchlan for BetaKit.