Cohere secures strategic investment from SAP as enterprise demand for generative AI grows

Toronto-based Cohere has also partnered with McKinsey.

German software giant SAP has made strategic investments in Toronto-based OpenAI rival Cohere and a pair of other major generative artificial intelligence (AI) players: San Francisco’s Anthropic and Germany’s Aleph Alpha.

SAP did not disclose the size of these investments, which come shortly after SAP spinout Sapphire Ventures (formerly known as SAP Ventures) announced a more than $1-billion commitment to generative AI startups. According to SAP, they “underscore [its] aim to create an open enterprise AI ecosystem for the future.”

“We are at a watershed moment, with generative AI poised to fundamentally change how businesses run.”

In related news, Cohere has also partnered with global consulting firm McKinsey to help the latter’s clients integrate generative AI. This collaboration with Cohere appears to mark McKinsey’s first public partnership with a large language model (LLM) provider.

As the broader tech market has cooled, interest in generative AI space has heated up as tools like OpenAI’s ChatGPT chatbot and image generator DALL-E have gone viral. In response to recent advancements, AI investment has grown in 2023, and businesses have scrambled to take advantage of AI by teaming up with, and pouring money into, companies like Cohere.

For its part, SAP said it already has 26,000 customers around the world using its existing SAP Business AI, demonstrating the appetite for this tech.

“We are at a watershed moment, with generative AI poised to fundamentally change how businesses run,” SAP chief strategy officer Sebastian Steinhaeuser said in a statement. “SAP is committed to creating an enterprise AI ecosystem for the future that complements our world-class business applications suite and helps our customers unlock their full potential.”

Founded in 2019 by former Google researchers, Cohere sells LLM-powered natural-language processing software to businesses. Cohere says its LLMs can be added to products to power interactive chat features, generate text for product descriptions, blog posts, and articles, and analyze the meaning of text for search, content moderation, and intent recognition.

RELATED: Cohere announces $270-million Series C from Inovia, Nvidia, Oracle, Salesforce

For Cohere, the SAP investment and McKinsey partnership follow its recent $270-million USD Series C financing from Inovia, Nvidia, Oracle, and Salesforce Ventures, among others, which brought the company to a reported $2 billion-plus valuation.

Within the generative AI space, Cohere competes against companies like ChatGPT creator OpenAI, which is backed by Microsoft, and Anthropic, whose investors include Google and Salesforce Ventures, the latter of which has also invested in Cohere.

Amid a competitive field, Cohere has positioned itself as a neutral LLM provider for enterprises that is not tied to a specific cloud provider like Microsoft.

“We are both independent and cloud-agnostic, meaning we are not beholden to any one tech company and empower enterprises to implement customized AI solutions on the cloud of their choosing, or even on-premises,” Cohere president and COO Martin Kon said in a statement.

RELATED: “The revolution has launched”: OpenAI’s Sam Altman charts the promise and peril of AI at Toronto event

Cohere’s new strategic collaboration with McKinsey adds to recent partnerships to bring its AI tech to Oracle and Salesforce customers.

LLMs require lots of money and computing power to train, which has required Cohere and its competitors to raise significant amounts of capital and partner with cloud giants to develop their tech.

As of June, Cohere had raised a total of $445 million USD from a group that also includes Tiger Global, Radical Ventures, Section 32, and AI leaders like Geoffrey Hinton, Fei-Fei Li, Pieter Abbeel, and Waabi’s Raquel Urtasun.

Feature image courtesy SAP.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache.

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