Ottawa Commits Up to $1.6 Billion for an Equity Stake in Cohere, Which Pledges 1,000 Jobs and $1.7 Billion in Canadian Compute
The federal government plans to take an equity stake of up to $1.6 billion in Cohere, the Toronto-founded company that builds secure AI systems for businesses and governments, Prime Minister Mark Carney announced on October 29. The Prime Minister’s Office described it as a commercial investment made alongside private investors including NVIDIA, Bell and Germany’s Schwarz Group. Carney made the announcement in Montreal as he welcomed European Union leaders for a summit.
In return, Cohere has made a set of commitments. According to the government, the company will create at least 1,000 new high-paying technical jobs in Canada by 2030, spend at least $1.7 billion on additional computing infrastructure in the country over the same period, keep its Canadian incorporation and headquarters, fund research partnerships and opportunities for students, and keep working with the Canadian AI Safety Institute. CBC News, citing Reuters, reported that Ottawa is joining a round led by Schwarz Group that targets $7 billion and would value Cohere at about $36 billion.
Carney framed the deal as a sovereignty decision, saying Canada would not wait for the future of AI to be decided elsewhere by people Canadians do not know or trust. Cohere chief executive Aidan Gomez called the investment a huge honour. The company said annual recurring revenue grew 165 per cent year over year as of the third quarter and that it now has 300 customers.
What it means in practice
The stake deepens a relationship that has been building for months. Schwarz pledged its lead role in April as part of Cohere’s merger with Germany’s Aleph Alpha, and Schwarz Digits says it will run Cohere models on its STACKIT cloud. In Canada, the company has been chasing public-sector work, including when it opened an Ottawa office to court federal buyers, and it already works with Bell, which deployed Cohere in its security operations centre investigations.
There are open questions. Cohere has completed only an initial close of the round and has not said how much has been committed or when it will close. Taxpayers will also want to see how the government values its stake, what governance rights come with it, and how the job and compute pledges will be measured and enforced.
What to watch next is the final size of the round, where the $1.7 billion in computing capacity is built, and whether federal departments become major Cohere customers as well as shareholders.