Ottawa to Invest Up to $1.6 Billion in Toronto AI Company Cohere

The federal government will make an equity investment of up to $1.6 billion in Cohere, the Toronto-based enterprise AI company. Cohere was founded by former University of Toronto computer science students Aidan Gomez, Nick Frosst and Ivan Zhang, U of T News reported.

The money is part of a planned $7-billion fundraising round led by Germany's Schwarz Group, which also includes Nvidia and Bell Canada's venture arm, as CBC News reported. The financing values Cohere at $35.7 billion. According to The Globe and Mail, that makes it the largest fundraise by a Canadian startup.

What Canada gets in return

Under the deal, Cohere has committed to create at least 1,000 new high-paying Canadian technical jobs and to put at least $1.7 billion into additional computing infrastructure in Canada by 2030.

The company will also keep its Canadian incorporation and headquarters. It will invest in research partnerships in Canada, create opportunities for students and recent graduates, and continue working with the Canadian AI Safety Institute on the safe development and use of advanced AI.

"As a Canadian-headquartered company, we believe maintaining global AI leadership across public and private sectors is a national imperative," Gomez, Cohere's CEO, said in a government news release. "AI will supercharge economic productivity, fortify national security and future-proof Canada's competitiveness. That's why building this technology and developing the next generation of AI talent right here in Canada is essential."

Carney: "The building blocks of AI were conceived in this country"

At an Oct. 29 news conference, Prime Minister Mark Carney said "the building blocks of AI were conceived in this country," pointing to advances including deep learning and neural language models.

He credited "Geoffrey Hinton in Toronto, Richard Sutton in Edmonton, Yoshua Bengio, who founded Mila… and Aidan Gomez, a student at University of Toronto who helped write the paper behind today's large language models and then came home to co-found Cohere."

Deep Toronto roots

Cohere builds secure AI systems for businesses and governments. It has deep roots at U of T: Gomez and Frosst both trained under Nobel laureate Geoffrey Hinton, a U of T University Professor Emeritus widely called the "godfather of AI."

In July, the university and Cohere announced a multi-year partnership to support the responsible adoption of AI across U of T. It is one of President Melanie Woodin's stated commitments.

Woodin congratulated Cohere on the "historic" fundraise. She said she is "thrilled at their success and the ways in which Cohere is strengthening Toronto's reputation as a hub of global AI leadership."

Why it matters for Toronto business

The investment lands in the same week that another Toronto AI company, Ada Support, agreed to merge with U.S.-based Dialpad in an all-share deal. The Globe and Mail reported that the deal values Ada at about $600 million, down from its US$1.2-billion pandemic-era peak.

The two deals show how unevenly money is reaching the city's AI sector. Cohere sells large models and infrastructure to enterprises and governments, and is attracting record financing with direct federal backing. Application-layer companies like Ada are consolidating as competition from large language models squeezes their older products.

Cohere's commitments on Canadian jobs and computing infrastructure run to 2030. Neither the government nor the company has published a hiring timeline or named locations for the new computing capacity. The Toronto Journal will report on those details as they are released.