Cohere is in advanced talks to raise between $2B and $3B, including financing from the Canadian government and existing backers, at a $20B valuation

Cohere Inc. is in advanced talks to raise between US$2-billion and US$3-billion, including financing from the Canadian government and existing backers, according to four sources familiar with the matter. The deal would value the artificial-intelligence company at US$20-billion.

Should a deal come to fruition, it would rank as the largest on record by a Canadian startup. The valuation would establish the Toronto-based AI developer as one of Canada’s most valuable technology companies.

Two of the sources said the deal could close as early as next week, though the timing could be pushed back. A number of big corporate events are scheduled next week, including the Canada Investment Summit and the Milken Institute Global Dialogues symposium in Toronto, and All In, the country’s largest AI expo, in Montreal. Cohere chief executive officer Aidan Gomez is scheduled to appear at all three events.

Cohere disclosed its fundraising and valuation figures on a call last month with investors, said one of the four sources familiar with the matter, who added that the German government is also in talks to participate. Non-government funding was expected to account for the majority of the investment, according to the source, and there is strong enough demand to complete the deal from private investors, they added. It is not clear which of the existing investors are participating in the round.

The potential deal has not yet been finalized, the sources said, and terms could change.

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The Globe and Mail is not identifying the sources because they are not authorized to talk publicly about the deal.

Cohere did not respond to a request for comment.

The funding round follows a similar financing this month from French AI company Mistral, which raised €3-billion ($4.8-billion) at a €21-billion valuation. Mistral and Cohere have often been compared as sovereign alternatives to U.S. AI companies.

Cohere was valued at roughly US$7-billion last September, and has raised funds from Radical Ventures, Inovia Capital, the Healthcare of Ontario Pension Plan, PSP Investments, Business Development Bank of Canada, Nvidia Corp. NVDA-Q and others.

Radical Ventures has played a central role in Canada’s AI ecosystem, backing star researchers such as Raquel Urtasun at Waabi Innovation Inc. and Sanja Fidler, who recently launched Veeda Innovation Inc.

Cohere was founded in 2019 to build large language models and competes with U.S. tech giants OpenAI and Anthropic, but has differentiated itself. It does not target consumers and instead works with companies and governments, and counts Royal Bank of Canada RY-T, BCE Inc. BCE-T and Japan’s Fujitsu as customers. Because Cohere’s clients typically run AI models on their own infrastructure, Cohere spends less on computer processing power than its competitors, the company has said.

It has also positioned itself as a sovereign alternative to other big tech companies, promising customers more control over the technology. This approach has enhanced the company’s standing in Canada as a national champion in a strategically significant sector at a time of fraught geopolitical relations, including a trade war with the United States and concerns from companies and governments about losing access to powerful AI systems from Silicon Valley tech giants.

“There has been a gradual loss of diversified dependence, ceded to a handful of massive technology conglomerates, and this has led to severe single-point-of-failure risks that threaten the national security of many of the largest democratic nations,” Mr. Gomez wrote on his website in March. “In pursuit of maximal efficiency, we have been left with fragility.”

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To that end, Cohere has been forging relationships in Europe, mirroring similar efforts by Prime Minister Mark Carney’s government. In April, Cohere struck a deal with German AI company Aleph Alpha GmbH to create a “global and independent AI powerhouse,” Mr. Gomez said at the time. The deal will give Cohere more access to the European market, where companies and governments are seeking alternatives to American tech as a part of a broader digital-sovereignty push.

German newspaper Handelsblatt reported at the time that the company would be worth US$20-billion after the deal closes.

Schwarz Group, a German conglomerate, said in April it would invest US$600-million in Cohere as part of an upcoming funding round. While the conglomerate is best known as a retailer operating through the Lidl and Kaufland brands, it has expanded into technology through its Schwarz Digits arm. It operates a handful of data centres and has ambitions to become a hyperscaler to compete with Amazon Web Services, Google Cloud and Microsoft.

In Canada, the federal government’s AI strategy announced in June created a $500-million fund that could take equity stakes in the most promising Canadian AI firms, and said Ottawa could use the country’s sovereign wealth fund announced in April to invest as well.

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Cohere has been championed by the federal government, with AI Minister Evan Solomon saying that only a handful of companies build LLMs in the world, and Cohere is the sole Canadian player. Ottawa announced up to $240-million in 2024 for the company to train AI models in Canada and signed a non-binding deal last year to explore the use of AI in the public service. Innovation, Science and Economic Development has also started using the company’s North platform, which can assist public servants with a variety of work-related tasks.

Patrick Pichette, a former partner at Inovia who served on Cohere’s board of directors, took on a new role this month as the CEO of Digital Transformation Canada, a new initiative under Mr. Carney to make use of AI and other technologies across government departments.

Cohere, which told investors in a February letter that it hit an annualized revenue rate of US$240-million in 2025, is up against much bigger competitors. OpenAI was valued at US$852-billion in March, whereas Anthropic was valued at US$965-billion in May and said its revenue run rate was more than US$47-billion, meaning it was on pace to earn that much in the year ahead. Both companies are reportedly working toward blockbuster IPOs. Meanwhile, powerful AI models from Chinese companies DeepSeek and Z.ai are enticing both businesses and consumers.

Mr. Gomez, who co-authored a seminal research paper about generative AI in 2017, started Cohere alongside Nick Frosst and Ivan Zhang.