Nvidia-backed AI startup Cohere is reportedly in talks to secure a significant investment that could propel the company’s valuation to $5 billion, marking a substantial leap from its previous valuation of $2.2 billion.

What Happened: AI startup Cohere is negotiating to secure $500 million in funding, aiming for a $5 billion company valuation, Reuters reported on Thursday.

The Toronto-based firm, known for developing AI foundation models similar to those of OpenAI, has experienced significant revenue growth, jumping to an annualized rate of $22 million this month from $13 million in December. This follows the release of their new model, Command-R. Cohere’s growth has been attributed to its enterprise AI models and a partnership with Oracle.

Last valued at $2.2 billion in June, when it raised $270 million, Cohere’s sought-after valuation has surged. Their fundraising ambitions were first hinted at by Reuters in January, suggesting a raise of $500 million to $1 billion. The latest round is expected to include contributions from existing investors.

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Cohere’s competitors include OpenAI, which has Microsoft as a backer and anticipates $1 billion in revenue for 2024.

Why It Matters: Cohere’s latest fundraising efforts come amid a dynamic period for AI startups. In February, Cohere was contemplating a funding round that could have valued the company at over $6 billion, indicating a bullish outlook on the AI market’s potential.

Furthermore, the AI industry has seen shifts in customer and employee interest following high-profile events such as the dismissal of Sam Altman from OpenAI. Rivals like Google and AI startups like Cohere saw increased interest, potentially benefiting Cohere as it competes for market share.

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