AI Startup Roundup: OpenAI Rival Cohere in Talks to Raise $1 Billion

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Cohere in talks to raise up to $1 billion in funding

OpenAI rival Cohere is in talks to raise up to $1 billion in funding, according to a report by FT.

It will be the most money ever to come to the Canadian startup as the AI race heats up. Cohere had four funding raises thus far, with the last one in June 2023 putting the startup’s valuation at $2.2 billion. Backers back then were Nvidia and Oracle as well as VC firms Index Ventures and Inovia Capital.

Former Google scientists Aidan Gomez and Nick Frosst founded Cohere, along with Ivan Zhang.

Gomez co-authored the famous seminal paper on Transformers that has revolutionized large language models. Frosst worked at Google Brain under Turing award winner Geoffrey Hinton’s Toronto team.

Cohere develops large language models for enterprises to build custom applications such as AI chatbots, using their own data. In contrast, OpenAI’s large language models are meant for wider use for consumers and businesses alike.

Cohere is one of AI Business’ seven companies to watch in 2024.

VC flight to quality in AI startups

AI startups commanded “substantially higher” valuations than non-AI startups, obtaining valuations over 1.5x higher than their non-AI counterparts in series B rounds, according to new research from CB Insights.

However, the surge in valuation was not the result of higher funding raises, since this has continued to fall since 2021. CB Insights said total equity deals to AI startups in 2023 dropped to their lowest level since 2017.

The research firm said the decline does “suggest investors are focusing their efforts on an industry-wide flight to quality.”

“For the select AI startups able to capture investors’ attention right now, this gives them even more leverage to command better deal terms and higher valuations when raising.”

Funding news

ElevenLabs

New York-based ElevenLabs develops AI speech solutions for creating synthetic voices. Its generative tech can be used to turn text into speech. Users can also create natural AI voices for uses like content creation and marketing materials.

The startup revealed a new line of products, including a voice library where users can upload and access AI voices, and a dubbing studio, where users can use AI to dub content across 29 languages.

Latest funding: $80 million, series B

Lead investors: Andreessen Horowitz, Nat Friedman (former GitHub CEO), Daniel Gross (former Apple machine learning director)

Other investors: Sequoia Capital, Smash Capital, SV Angel, BroadLight Capital and Credo Ventures

Funding plans: The capital will be put towards research, expanding infrastructure, developing new products for specific verticals and enhancing safety measures to ensure responsible deployments.

Sakana AI

Japanese-based Sakana is attempting to build foundation models “based on nature-inspired intelligence.”

The startup was founded by former Google AI researchers Llion Jones and David Ha. Sakana already enjoys an AI research partnership with NTT, Japan’s largest telecom company.

Latest funding: $30 million, seed round

Lead investor: Lux Capital

Other investors: Khosla Ventures

Funding plans: The funds will go towards building an AI lab in Japan, including hiring researchers and engineers.

Vicarius

New York-based Vicarius develops cybersecurity tools to help businesses protect themselves from software exploitation. Its autonomous vulnerability remediation platform is designed to consolidate vulnerability assessments and remediation.

Latest funding: $30 million, series B

Lead investor: Bright Pixel Capital

Other investors: AllegisCyber Capital, AlleyCorp, Strait Capital

Funding plans: Vicarius will move to support its product roadmap and increase its team size, co-founder and CEO Michael Assraf told TechCrunch.

Recraft

Image generation platform Recraft launched just eight months ago but has already attracted over 300,000 users. Recraft is attempting to offer image generation capabilities from its own foundation model, which it claims will “radically improve the quality of the AI-generated imagery.”

Latest funding: $12 million, series A

Lead investors: Khosla Ventures and former GitHub CEO, Nat Friedman

Other investors: RTP Global, Abstract VC, Basis Set Ventures, Elad Gil

Funding plans: The new funds will go towards bringing in a “specialist team” to develop its own foundation model, rather than relying on open source systems like Stable Diffusion.