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According to the Financial Times, on July 23, artificial intelligence developer Cohere raised $500 million in a new round of financing, making it one of the world's most valuable startups in the field, which also enhances the Canadian company's ability to compete with competitors such as OpenAI and Anthropic.

The funding round values ​​Cohere at $5.5 billion. The company, founded in 2019 by former Google researchers, is in a fierce battle with larger rivals for lucrative contracts with companies scrambling to integrate artificial intelligence into their businesses.

"The funding will be used for new models, computing power and headcount," said Josh Gartner, a Cohere spokesman. "This continues our momentum."

The company plans to double its workforce to about 500 this year.

The funding comes from new and existing investors, including Canadian pension fund investment manager PSP Investments, Nvidia, Oracle, Salesforce Ventures and Fujitsu. The Financial Times reported in January that Cohere was raising funds with a target amount of between $500 million and $1 billion.

Unlike its larger competitors, Cohere doesn’t develop AI chatbots for consumers. Instead, it appeals to enterprise clients with its AI models. Because of its narrow focus, Cohere’s best-performing large-scale language models are cheaper to build, train, and run than its competitors’ models.

The company is still far smaller than OpenAI, which is valued at nearly $90 billion and has raised more than $10 billion since 2019, and Anthropic, which raised more than $7 billion in a funding spree between 2023 and this year. Anthropic was most recently valued at nearly $20 billion.

Cohere founders Aidan Gomez, Nick Frosst and Ivan Zhang are also competing with Google, which has developed its own suite of enterprise AI products.

The company, which raised $270 million last June, has rewarded investors in just over a year, highlighting the breakneck pace of development in an industry that has become more competitive since the launch of OpenAI’s landmark ChatGPT chatbot in November 2022.

More than 18 months later, investors are increasingly eager for evidence that their big bets will one day pay off. Many see recent AI breakthroughs as the equivalent of a technology platform shift, but the high cost of developing cutting-edge models means startups must strike lucrative deals with big tech partners — as OpenAI did with Microsoft and Anthropic did with Google and Amazon — or else grow revenue quickly.

Cohere's annualized revenue reached $35 million in March, almost triple the $13 million it was expected to generate by the end of 2023, according to people familiar with the company's development.