Toronto-based AI company Cohere hopes to secure as much as $7 billion CAD in new financing—which, if successful, would become the largest funding round in Canadian startup history.
The AI firm announced these plans and an initial close of its planned Series E on Thursday at Montréal AI research hub Mila, where the federal government revealed that it would take a $1.6-billion stake in Cohere as part of this round. Cohere has secured most of the target funding, a company spokesperson told BetaKit.
“We are choosing to grow Canada’s technology future instead of someone else’s.”
Cohere plans to put the capital toward computing infrastructure investment, and developing and delivering its AI models and other products to enterprises and governments. Cohere said that the fundraise is set to value the company at nearly $36 billion, post-money. This would make Cohere, Canada’s entrant in the frontier model race, the country’s most valuable private technology firm.
At the Montréal announcement, co-founder and CEO Aidan Gomez said the financing will also make Cohere “the largest AI company outside of the United States.” The funds will keep Cohere headquartered in Canada, Gomez added. It will also help the more than 800-person company to create 1,000-plus “high-paying tech jobs” in the country by 2030.
“We are choosing to grow Canada’s technology future instead of someone else’s,” Gomez said.
Prime Minister Mark Carney announced the federal investment in Cohere on the first day of the Canada-European Union Summit. Carney is hosting the event to further strengthen economic and strategic ties between Canada and the EU as it seeks to forge a middle-power alliance to decrease its dependence on the US.
Both Canadian officials and the country’s AI industry have been working more closely with European counterparts this year. AI and Digital Innovation Minister Evan Solomon announced greater collaboration with Germany’s digital minister at ALL IN in September; Cohere, which recently purchased Czech cybersecurity AI startup Aisle, is in the final stages of merging with German AI peer Aleph Alpha as part of a push to create a viable, transatlantic alternative to US AI giants like Anthropic and OpenAI.
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Cohere said German retail giant and major Aleph Alpha shareholder Schwarz Group has committed to leading the financing, with support from new investors like the Government of Canada, Canadian telecom firm Bell’s venture capital arm, Bell Ventures, and Luxembourg’s Bullhound Capital. Existing backers, including Montréal-based Inovia Capital, US chip giant Nvidia, and Saudi Aramco-owned Prosperity7 Ventures, are also participating.
“In just seven years, Cohere has grown from a Toronto startup into a global company,” Carney said in Montréal. “It’s a Canadian success story being written before our eyes. And now, Canada has a stake in it.”
Carney said the feds would be investing on a “commercial basis.” He added that under this investment, Cohere will stay Canadian and open doors for the next generation of AI leaders through research partnerships.
“This will mean that Canadian AI companies can grow here, that Canadians will share in what they build, and that AI will serve Canadians to make their lives better,” he said.
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In an interview on Thursday, AI and digital innovation minister Evan Solomon told BetaKit the federal investment is coming through the Canada Development Investment Corporation, a Crown corporation that manages assets on behalf of the government. It is separate from the feds’ planned $500-million Canadian Tech Growth Fund, which was announced as part of Canada’s broader AI strategy in June and will let the government provide growth capital and take stakes in promising AI companies.
The $1.6-billion investment will be “staged” and based on milestones, Solomon said. Though he declined to share the commercial terms of these stages, he said that “jobs and revenue targets are key.”
The announcement came the same day that Carney released Canada’s first national security strategy in 20 years. “Sovereignty now requires secure access to semiconductors, critical minerals, payment systems, clean energy technologies, vaccines, space-based communications, and artificial intelligence. Building these capabilities underpins our economic, foreign policy, and defence strategies,” he said.
This isn’t the first time Cohere has received federal money. In 2024, the feds awarded Cohere up to $240 million through its Sovereign AI Compute Strategy for a multibillion-dollar AI data centre.
Cohere to build new Canadian data centres
As part of the new agreement, Cohere will invest $1.7 billion in new computing infrastructure in Canada by 2030. Chief AI officer Joëlle Pineau told BetaKit in an interview that this is for building data centres in Canada as well as partnering with other compute infrastructure companies.
“To get compute, you need capital,” Pineau said. “Today’s announcement is going to open up a lot of opportunities in terms of what we can do. It’s a fuel that we need in order to build high-quality models and to serve them in a way that is private and secure.”
She added that Cohere is open to compute hosted in Europe, particularly to serve its global clients. For European clients who would prefer AI hosting on their own soil, lead investor Schwarz Group has a cloud services division called Stackit.
Chris Arsenault, co-founder and partner at Inovia, one of Cohere’s returning backers, called today’s investment “an important moment for Canada.” He contrasted the environment today with when Canada’s biggest tech company, Shopify, went public just over 10 years ago—and “most Canadians thought Shopify was an American company.”
“Fast forward, Cohere is the most important private Canadian technology company in valuation, in fundraising, in talent, and in global partnerships,” Arsenault asserted in an interview with BetaKit. “This is one example of what we’re becoming as an ecosystem.”
With files from Sarah Rieger.
Feature image courtesy Mark Carney via LinkedIn.