Ottawa invests $1.6 billion for equity stake in AI firm Cohere

MONTREAL · The Canadian government will invest up to $1.6 billion to take an equity stake in Toronto-based artificial intelligence company Cohere. Prime Minister Mark Carney announced the funding Thursday in Montreal as part of a broader $7 billion financing round for the AI lab. The round, led by Germany's Schwarz Group, would value Cohere at about $36 billion. Carney said the investment was made alongside private partners including Nvidia, Bell Canada and Schwarz Group.

"We are not waiting for the future of AI to be decided somewhere else by those we don't know or by whom we don't trust. We're building it right here in the right way," Carney said. He called the partnership a concrete example of what Canada and Europe can build together. The prime minister emphasized that Cohere's headquarters and incorporation will remain in Canada. "Cohere will stay Canadian, creating more opportunities for our workers and businesses," he said.

Cohere CEO Aidan Gomez called the government's commitment "a huge honour." He said his seven-year-old company is now "one of the very few companies in the world building frontier AI technology at a global scale." Gomez added that Cohere is the largest AI firm outside the United States and China. The financing round is the largest ever for a Canadian startup and would make Cohere the country's most valuable private tech company once completed.

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In exchange for the federal funding, Cohere has agreed to several conditions. The company will invest at least $1.7 billion to build new computing infrastructure in Canada by 2030. It has also pledged to create a minimum of 1,000 new high-paying technical jobs in the country. Other commitments include maintaining its Canadian headquarters, investing in research partnerships and continuing to work with the Canadian AI Safety Institute. The government said the money will be provided in stages with regular reporting on these promises.

Cohere chief financial officer Francois Chadwick said the capital is needed to expand the company's global reach. "Canada needs to be there at the forefront," Chadwick said. "Instead of having two global leaders, China and the U.S., Canada becomes a global leader in the AI world." The funds will support the development of new AI models, products for regulated industries and computing infrastructure. The company's annual recurring revenue grew 165 per cent year over year as of the third quarter, and its customer base has expanded to 300.

German retail giant Schwarz Group, which owns Lidl and Kaufland, pledged $780 million to lead the funding round in April. The investment is tied to Cohere's merger with German AI developer Aleph Alpha, in which Schwarz owned a more than 20 per cent stake. Schwarz Digits CEO Christian Müller said the group plans to run Cohere's models on its STACKIT cloud. "Calling the investment the next step after the Aleph Alpha deal," Müller said. Other returning investors include Nvidia, Montreal's Inovia Capital and Prosperity7 Ventures, an arm of Saudi Aramco.

Cohere has only completed an initial close of the financing round. The company did not specify how much money has been committed so far or when it expects the round to conclude. Chadwick declined to comment on earlier reported fundraising targets or discussions with the German government. "We started with some original figures on what we were looking to raise," he said. "Because we were oversubscribed on our original thinking, we've kept the investment open, and we will be looking to close soon." The new financing would represent a major increase from Cohere's valuation of roughly $7 billion in a round last September.

The company develops large language models and markets them as a sovereign alternative to technology from American and Chinese firms. It faces stiff competition from industry leaders OpenAI and Anthropic. Cohere is creating tailored tools for heavily regulated sectors like finance, health care and defence, and has partnerships with contractors including Thales. This marks the latest government support for Cohere, following a $240 million federal award in 2024 for computing power and a 2025 agreement to test its technology in the public service.

With files from The Canadian Press, CBC News and Global News