The federal government has committed to invest up to $240 million in Toronto-based artificial intelligence (AI) company Cohere.

The investment marks the first allocation under Canada’s new $2-billion Sovereign AI Compute Strategy unveiled last week.

The funding will support Cohere in securing the private capital required to establish a new state-of-the-art, multi-billion-dollar AI data centre in Canada, the government announced. Expected to be operational by 2025, the facility will provide the domestic computing power needed for Canadian AI firms to drive innovation and maintain a competitive edge in the global race for AI breakthroughs, the government added in a news release.

The project’s exact location, physical size and computing capacity were not disclosed.

“Today, we are ensuring Canadian AI innovators have the right incentives to scale-up here at home,” said Deputy Prime Minister and Finance Minister Chrystia Freeland. “Our $240-million investment in Cohere is crowding in a multi-billion-dollar private investment to build compute capacity, which will create more good Canadian jobs paying higher wages.”.

Cohere, founded in 2019 by Aidan Gomez, Nick Frosst, and Ivan Zhang, has emerged as a leading player in generative AI and large-language models. The company is valued at more than US$5.5 billion and also operates out San Francisco while employing about 400 people, according to Bloomberg.

The AI data centre will be built by CoreWeave and serve as a critical component of Canada’s AI ecosystem, offering sufficient computing capacity for other firms to develop advanced AI solutions, according to the news service. Once complete, the project is expected to play a key role in strengthening Canada’s position as a global leader in AI innovation, according to reports..

François-Philippe Champagne, the minister of innovation, science and industry, touted the the importance of the project in mobilizing private-sector investment.

“Artificial intelligence is revolutionizing the world, and Canada is at the forefront with one of the most advanced ecosystems globally,” he said in the news release. Canadian champions drawing in billions of dollars in investment to build infrastructure is a home run when it comes to putting policy in action.”

Gomez, Cohere’s CEO, welcomed the government’s support, emphasizing its impact on the company’s growth and innovation.

“The government’s investment in AI innovation is helping companies use this emerging technology to drive productivity,” he said in the news release. “Cohere will use this support to continue building cutting-edge AI solutions that deliver significant efficiency gains for customers. We are proud of our Canadian heritage and look forward to growing our workforce in the country, while further building our global business.”

Cohere has distinguished itself from competitors like OpenAI by focusing on business applications of AI rather than consumer products. The company has worked with major clients, including Oracle Corp., Fujitsu Ltd., and McKinsey & Company, to provide tailored generative AI models for businesses, according to the Globe and Mail.

Ottawa’s Canadian Sovereign AI Compute Strategy is designed to enhance the nation’s AI infrastructure and economic growth through three key initiatives: mobilizing private investment, building public supercomputing capacity, and delivering affordable compute power for Canadian innovators.

The government will invest up to $700 million will be invested through the AI Compute Challenge to support new or expanded data centres in Canada.

A $1 billion investment will fund sovereign supercomputing infrastructure, including a large-scale data centre and a secure computing facility.

And, small and medium-sized enterprises will be able to tap into the $300-million AI Compute Access Fund.

The comprehensive approach aims to address the short-, medium-, and long-term compute needs of Canada’s AI ecosystem while fostering innovation and ensuring global competitiveness, said the government while unveiling the specific allocations last week.

Cohere’s financial commitment to the project was not disclosed, but Bloomberg reported that the company is expected to provide a significant investment in the project as it seeks to train its models and secure computing power in Canada. 

Cohere has raised US$970 million from a pool of investors that includes the Toronto-based Canada Pension Plan Investment Board and Public Sector Plan Investment, Montreal-based investment firm Inovia Capital, and U.S.-based global tech giant Nvidia, which is a chip maker; Oracle and Cisco Systems.

Citing comments from Gomez, the Globe reported that the Canadian data centre will graphic process units built by Nvidia.

Photo: Cohere