Cohere, an AI startup, seeks to raise $500 million at a $5 billion valuation, with $22 million in annual sales, enterprise AI models, an Oracle relationship, cloud plans, and backing from major investors amid the AI fundraising frenzy. The Toronto-based company’s annualized revenue run rate increased to $22 million this month from $13 million in December when it released the new model Command-R, according to the person, who asked anonymity to discuss secret concerns.

Cohere an AI Startup

Cohere, an artificial intelligence company that builds foundation models to compete with ChatGPT maker OpenAI, is in advanced talks to raise $500 million at a valuation of roughly $5 billion, according to a source familiar with the matter.

As reported by Reuters, the Toronto-based company’s annualized revenue run rate jumped to $22 million this month from $13 million in December, when it debuted the new model Command-R, according to the source who requested anonymity to discuss confidential matters.

Former Google researchers formed the business, which has pitched investors on the potential for growth by developing enterprise-focused AI models. Cohere, which already has a connection with Oracle, intends to make its models available on other major cloud providers.

According to Reuters, Cohere was valued at $2.2 billion last June after raising $270 million from investors such as Inovia Capital, Nvidia, and Oracle. The increased valuation it seeks was not previously revealed.

Reuters reported in January that Cohere was trying to raise $500 million to $1 billion.

The insider noted that existing investors are likely to participate in the latest investment round.

If it succeeds, it might be the most recent indication of investors’ willingness to bet on the future adoption of AI models and fund AI businesses at high valuations despite modest revenue figures.

Companies that use foundation models have been vying for funding in an effort to finance the costly creation of AI models, which call for enormous amounts of processing power and the best experts in the field.

The Cohere platform is available as a managed service via API from platforms like Amazon SageMaker and Google Vertex AI. It is suitable for activities such as copywriting, content moderation, data classification, and information extraction.

Cohere competes with OpenAI and Anthropic, focusing on AI for business applications.

OpenAI expects to generate $1 billion in income by 2024 and has raised more than $10 billion from investors, including Microsoft. Other AI labs, such as Anthropic and Mistral, have also received funding from major technology companies.

Cohere’s language AI enables every developer and enterprise to create extraordinary products while capturing actual commercial value.