Shortly after announcing $500 million USD in Series D funding, Toronto-based generative artificial intelligence (AI) startup Cohere laid off approximately five percent of its employees.
These staff cuts took place yesterday and impacted around 20 of the enterprise-focused OpenAI competitor’s 400-person workforce across multiple offices. The layoffs were first reported by Fortune and have since been confirmed by BetaKit.
“With our most recent round of financing in place, we have a clear vision for the future of Cohere, which has required some internal realignment.”
Josh Gartner, Cohere head of communications
“With our most recent round of financing in place, we have a clear vision for the future of Cohere, which has required some internal realignment,” Cohere head of communications Josh Gartner told BetaKit in a statement. “We will continue to aggressively hire people as we work to offer companies the most accurate, secure, and private multilingual AI solutions in the market.”
Cohere’s Series D, which BetaKit previously reported in June, was announced on June 22 and ultimately valued Cohere at $5.5 billion, making it one of Canada’s most valuable tech startups.
Gartner confirmed to BetaKit that the round was financed by new investors, including Canadian public sector pension investment manager PSP Investments, American networking tech firm Cisco, the venture arm of United States (US) chip company AMD, Crown corporation Export Development Canada, US alternative asset manager Magnetar Capital, and Japanese tech services giant Fujitsu. Per Gartner, existing backers Nvidia, Salesforce Ventures, and Oracle also participated in the all-equity financing, which he said did not include any secondary capital.
Founded in 2019 by former Google researchers, Cohere builds large-language models (LLMs) that power chatbots and other generative AI applications. Unlike some of its rivals, which include OpenAI, Anthropic, Mistral, and Google, Cohere caters exclusively to businesses.
With its LLMs, Cohere aims to help enterprises power interactive chat features, generate text for product descriptions, blog posts, and articles, and analyze the meaning of text for search and content moderation, among other applications. As of the end of March, Cohere was generating $35 million in annualized revenue, up from $13 million last year.
In a letter to Cohere employees that was viewed by Fortune, Cohere co-founder and CEO Aidan Gomez called yesterday’s layoffs a “necessary step to ensure that we have the right people in place to remain highly competitive and at the forefront of the industry,” acknowledging that this has been a “mixed week,” with “a successful funding round closed” and an “exciting new roadmap” of new models.
Cohere indicated that while the company let some people go and eliminated some positions this week, it is continuing to grow its overall headcount. “Overall, we anticipate that we are likely to double our overall headcount over the course of 2024–unchanged from before this decision—reflecting the growth of the business,” Gomez wrote. Gartner confirmed to BetaKit that the copy of this letter Fortune published in full was accurate.
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According to Gartner, fewer than half of the roles Cohere cut were in Canada. He noted that Cohere has added nearly 40 employees in Canada thus far in 2024, and currently has 18 Canadian openings listed on its jobs page (and 35 overall).
Cohere’s recent Series D comes a year after Cohere closed a $270-million Series C round from Montréal’s Inovia Capital, Nvidia, Oracle, Salesforce Ventures, and others at a reported $2-billion-plus valuation. This latest capital brings Cohere’s total funding to about $1 billion, from a group that also includes Tiger Global, Toronto-based Radical Ventures, Section 32, and AI leaders like Geoffrey Hinton, Fei-Fei Li, Pieter Abbeel, and Waabi’s Raquel Urtasun.
Gartner told BetaKit that the round sets up Cohere for “accelerated growth.” In a statement, he said, “We continue to significantly expand our technical teams to build the next generations of accurate, data privacy-focused enterprise AI. Cohere is laser-focused on leading the AI industry beyond esoteric benchmarks to deliver real-world benefits in the daily workflows of global businesses across regions and languages.”
Feature image courtesy Web Summit. Photo via Flickr.
