Cohere Secures $500M Funding Amid Rising Skepticism in the Enterprise AI Sector

Questions about the return on investment for generative AI tools in enterprises continue to arise, but Toronto-based startup Cohere is making waves with the announcement of a $500 million Series D fundraising round. This funding boosts the company's valuation to $5.5 billion, underscoring sustained investor interest in the sector, despite being significantly less than OpenAI's reported $90 billion.

Cohere's Series D funding, initially reported by Bloomberg and confirmed by the company, was spearheaded by PSP Investments, along with contributions from Cisco Systems, Fujitsu, AMD Ventures, Magnetar, and Export Development Canada. Returning investors included Oracle, Salesforce Ventures, and Nvidia, as noted by Cohere's head of communications, Josh Gartner.

This announcement follows noteworthy investments in the sector from rivals: Anthropic secured $450 million in its Series C round, French AI company Mistral raised $640 million, and search chatbot Perplexity achieved unicorn status with a recent $65 million investment.

Cohere aims to utilize this capital for the ongoing development of its enterprise AI models, emphasizing data privacy, multilingual capabilities, and advancements in retrieval augmented generation (RAG), a prominent theme highlighted at the recent VB Transform event in San Francisco.

Cohere has released two enterprise-focused large language models (LLMs), Command R and Command R+. Upon the release of Command R+ earlier this year, it demonstrated performance metrics that matched or even exceeded those of other leading LLMs, including Anthropic’s Claude 3, OpenAI’s GPT-4 Turbo, and Mistral’s Mistral-Large. Competitive pressures have intensified recently, with commercial providers launching new, advanced LLMs, such as OpenAI's more powerful GPT-4o and its cost-effective GPT-4o mini model designed for enterprise suitability.

In addition to its product offerings, Cohere has partnered with Fujitsu to develop language models tailored for Japanese comprehension.

Cohere distinguishes itself by focusing solely on the enterprise market, unlike competitors like OpenAI, which offer chatbot enterprise plans alongside free consumer versions. In line with this strategy, Cohere launched the enterprise AI assistant Coral last summer, designed to reduce hallucinations and train on internal data while prioritizing data security. A preview of Coral is available for consumers on Cohere’s website, alongside a Chat API for third-party developers to create their own applications.