By Roman Aglaganov
Canada’s government is buying a piece of its best-known AI company. On 29 October Prime Minister Mark Carney announced in Montreal that Ottawa will make an equity investment of up to C$1.6 billion (about US$1.1 billion) in Cohere, the Toronto-based developer of AI models for businesses and governments.
The deal
The government’s money is part of a round of up to C$7 billion that values Cohere at C$35.7 billion, according to The Logic. Germany’s Schwarz Group is leading the round, joined by new investors including Bell Ventures and returning backers including Nvidia. Cohere has not yet raised the full amount and has not said how much investors have committed so far. Even so, it would be by far the largest private funding round for a Canadian technology company.
In return, Cohere has committed to remain incorporated and headquartered in Canada, and to invest at least C$1.7 billion in Canadian computing infrastructure by 2030. Ottawa had already pledged up to C$240 million towards a computing project in Cambridge, Ontario, where Cohere will be the anchor tenant.
Why governments are doing this
Carney framed the investment as a matter of sovereignty. “The most powerful AI systems are concentrated in a very small number of companies, in a very small number of countries,” he said. “That concentration carries risks: to cost, to resilience and to sovereignty.” Semafor notes that US allies are increasingly trying to reduce their reliance on American technology, and Cohere sells itself on exactly that: models customers can run on their own systems, keeping sensitive data under their control. It recently agreed to combine with Germany’s Aleph Alpha to grow in Europe.
The questions
Cohere is growing fast by its own account. It says annual recurring revenue rose 165% year on year by the end of the third quarter, and it now has 300 customers, including RBC, Bell and TD Bank. But it is small next to its US rivals, which raise tens of billions at a time. A headquarters promise keeps the company’s address in Canada; it does not guarantee that Cohere keeps up with the frontier, or that taxpayers get their money back. The full terms of the government’s stake have not been published.
