The Canadian government is taking an equity stake in Cohere, joining a funding round that the Toronto-based AI lab says is the largest private financing ever undertaken by a Canadian technology company.
Cohere announced on Thursday the initial close of its Series E round, which is targeting up to 7 billion Canadian dollars and would value the company at 35.7 billion Canadian dollars. Reuters put the target at about 4.49 billion US dollars. The companies of Germany's Schwarz Group are leading the round, with Bell Ventures, Bullhound Capital and the Government of Canada joining as new investors, and Inovia Capital, Nvidia and Prosperity7 Ventures returning.
Ottawa did not disclose the size or terms of its stake. Cohere said it has made a number of commitments as part of the government investment to support Canada's sovereign AI ecosystem, Canadian jobs and computing infrastructure, but it did not specify those commitments. Chief executive Aidan Gomez called the government's investment "a huge honour, not only for Cohere but for the country," and described the round as a record-setting moment for Canadian technology.
Prime Minister Mark Carney framed the investment in sovereignty terms, saying it is about choice and security, and about giving businesses and governments more control over where sensitive data is stored, how it is used and who can access it. That language matches the business Cohere has built since its founding in Toronto in 2019: AI for regulated industries and governments, designed to run in a customer's own environment — in a private cloud, on premises, or in fully air-gapped settings — rather than sending sensitive work to a consumer chatbot.
The Schwarz connection gives that pitch a European anchor. Schwarz owns the Lidl and Kaufland retail chains, pledged 500 million euros in April as part of Cohere's combination with German AI developer Aleph Alpha, and has spent heavily on data centres in Germany. Christian Müller, chief executive of its Schwarz Digits division, said the group plans to run Cohere's models on its STACKIT cloud, calling the investment the next step after the Aleph Alpha deal. Cohere said transactions this year including Aleph Alpha, Reliant AI and AISLE have strengthened its platform across sovereign AI, healthcare and life sciences, and cybersecurity.
The money is earmarked for model development, products for regulated industries and long-term computing infrastructure. Chief financial officer Francois Chadwick said Cohere will advance its modelling and product roadmap, develop fully verticalized AI solutions for regulated industries, and continue scaling across North America, Europe, the Middle East and Africa, and the Asia-Pacific region to meet customer demand.
The growth figures help explain the valuation. Cohere said annual recurring revenue grew 165 percent year over year as of the third quarter, helped by its North agentic AI platform, and that its customer count has grown to 300, a twentyfold increase over the past year in the company's telling. Named customers include RBC, TD Bank, Bell Canada, Fujitsu and PwC, spanning finance, telecommunications, healthcare, manufacturing, energy and government.
Only an initial close has been completed. Cohere did not say how much has been committed so far or when it expects the round to close, so the headline target is an ambition, not yet a banked total. Even so, a government buying equity in a domestic AI lab, alongside a German retail group building sovereign cloud capacity, is a clear sign of where the AI race is heading: not just bigger models, but models that countries and regulated companies believe they control.