AI startup Cohere in talks to raise funding at $6 billion plus valuation -sources
(Reuters) – Cohere, an AI foundation model company that competes with Microsoft-backed OpenAI, is in talks to raise hundreds of millions of dollars in a funding round that could value the startup for more than $6 billion, sources told Reuters, in the latest sign of the investment frenzy surrounding generative AI.
Toronto-based Cohere, founded by former researchers at Alphabet in 2019, has quickly risen through the ranks of AI startups due to their research-intensive background and close ties to Google, said the -investors.
Foundation models are AI systems that are trained on large data sets, with the ability to learn from new data to perform a variety of tasks. Generative AI aims to make human-like creations through computer code that has processed large amounts of data.
Cohere plans to introduce a new ChatGPT-like dialog model to let enterprise users generate text and engage with the model to refine the output. Unlike ChatGPT, Cohere’s technology will be mainly accessible to developers and businesses, CEO Aidan Gomez told Reuters in an interview.
“Our chat templates are focused more on business-applicable tasks like answering questions than writing poems. We don’t plan to give them away for anyone to use for free without limit,” Gomez said. “We want to build a strong and sustainable business.”
Gomez declined to comment on the status of the company’s financing.
It was not immediately clear how much Cohere was looking to raise in the current round. Sources requested anonymity to discuss private funding matters.
Cohere has raised $170 million to date from funds including Index Ventures, Tiger Global and AI luminaries Geoffrey Hinton, Fei-Fei Li and Pieter Abbeel.
FOCUS ON NLP
Focusing on training natural language processing (NLP) models, Cohere competes with a group of foundational model providers such as OpenAI and Anthropic.
Gomez said the company differentiates itself by focusing on serving enterprise users, and Cohere has been talking to companies from marketing, consulting and technology to help them incorporate generative AI.
Cohere announced a cloud partnership with Alphabet to access its TPU computing power last year. Its language AI also becomes available on Amazon’s fully managed machine learning service SageMaker in January.
Last month, Cohere hired Martin Kon, YouTube’s former chief financial officer, to lead its product and marketing strategy. Cohere is running some consumer applications including Hyperwrite, which helps people write faster and generate articles using AI.
“We expect this year to be a breakout year for us to bring in enterprise customers,” said Gomez.
Gomez said Cohere will focus on text generation models, unlike its peer openAI which released the GPT-3 model for text as well as DALL-E for image generation.
Since the launch of ChatGPT in November, the technology that can generate prose, images or computer code on command has attracted the attention of investors. Other foundation model providers such as Anthropic are also in talks to raise funding with multi-billion valuations, investor sources said.
With Microsoft Corp’s $10 billion investment in OpenAI, other big tech companies, including Alphabet and Oracle, are also looking at investing in AI startups, sources said.
Gomez said Cohere will not take on strategic investments that require exclusive rights.
“It is important for us to remain independent and work with different cloud providers,” said Gomez.
(Reporting by Krystal Hu in Toronto; Editing by Kenneth Li and Grant McCool)
By Krystal Hu