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Artificial intelligence start-up Cohere is seeking to raise more than $500mn in new funding, aiming to catch up in the hugely expensive race to build cutting-edge AI models alongside rivals such as OpenAI, Google and Anthropic.
The Canadian start-up was targeting a valuation of above $5.5bn, according to two people with knowledge of the discussions, broadly similar to the price tag it received from its previous funding round last year.
Another person with direct knowledge of the discussions said the figure could reach between $6bn and $6.5bn, but cautioned the talks were in the early stages.
While such a deal would still place it among the most valuable start-ups in the field, the talks suggest Cohere has fallen behind US competitors who have seen their market valuations soar in comparison.
In April, OpenAI secured a $300bn valuation, up from the $157bn in 2024, while Anthropic’s latest funding round tripled its valuation to $61.5bn in March.
Cohere was founded by former Google researchers, including chief executive Aidan Gomez. He is a co-author of Google’s seminal “Attention Is All You Need” research paper, which introduced the concept of the transformer, an AI architecture that underpins all large language models.
Unlike competitors, Cohere has not launched a consumer-facing app, and has positioned itself as a more enterprise and privacy-focused challenger to OpenAI and Anthropic.
Cohere has also moved into creating “open” models that are freely available for developers to access and build on, such as its Aya family of multilingual models. However, it is entering a crowded market with alternatives from Meta and start-ups Mistral and DeepSeek.
Cohere’s founders Gomez, Nick Frosst and Ivan Zhang are also fighting for lucrative company contracts with tech giants such as Google, Microsoft and Amazon, which sell their own AI models to enterprises.
It has doubled its annual recurring revenue in the past four months, crossing $100mn last month, according to a person close to Cohere.
“A lot of the consumer adoption happened right away,” said the person. “Enterprise tends to be slower in adoption but stickier in terms of users. Companies aren’t known to adopt tech early.”
Developing powerful AI models requires huge amounts of money to train models and pay for computing power. Nearly three years after OpenAI’s ChatGPT kick-started the AI boom, investors are keen to see a return on the billions of dollars invested in AI model makers.
A new challenger for Cohere are a number of AI start-ups building applications on top of AI models, such as coding company Anysphere, which is behind the popular coding tool Cursor. These start-ups are attracting keen investor interest and many are projecting that they will generate hundreds of millions of dollars of revenue. Earlier this year, Anysphere was valued at $2.5bn.
Cohere has also introduced North, a platform that allows businesses to build AI agents for office work, but it is only available to a limited amount of customers.