Cohere is raising up to $7 billion in new funding, including an equity investment of up to $1.6 billion from the federal government, as the company scales up its business to challenge foreign tech giants. The round will value the Toronto-based AI developer at $35.7 billion.

Germany’s Schwarz Group is leading the round, with new investors Bell Ventures, Bullhound Capital and the Canadian government joining returning backers Inovia Capital, Nvidia and Prosperity7 Ventures.

Cohere hasn’t yet raised the full $7 billion, and has not disclosed how much of it investors have committed to date. 

It will be by an enormous margin the largest private funding round ever raised by a Canadian technology company. The biggest such investments previously were the $1.24 billion Vancouver legaltech company Clio raised in 2024, which included some secondary sales, and the US$1 billion that Toronto autonomous driving company Waabi raised in January.

It marks a dramatic increase both in the amount of money Cohere is raising—its previous round raised US$600 million across two closings in 2025—and in the value of the company, which in 2025 was US$7 billion.

The federal government’s investment comes with commitments from Cohere that the company will remain incorporated and headquartered in Canada, and that it will invest at least $1.7 billion in Canadian computing infrastructure by 2030, Prime Minister Mark Carney said in an announcement in Montreal on Thursday.

Cohere plans to use the financing to develop AI models and products, secure long-term computing infrastructure and expand internationally, it said in a press release.

The company is among a small group of companies developing frontier AI models, alongside OpenAI, Anthropic and France’s Mistral. Cohere markets itself as a sovereign AI provider, offering technology that its customers can run on their own systems, letting them retain control over sensitive data. It targets governments and highly regulated industries, such as banking, health care and defence. 

While its latest investment push is massive by Canadian standards, its U.S. competitors have much more money behind them. OpenAI announced a US$122-billion raise in March at a US$852-billion valuation. Anthropic raised US$65 billion at a US$965-billion valuation in May, and is now preparing an initial public offering that could raise another US$100 billion or more. 

Carney framed Ottawa’s investment in Cohere as a bet on Canada’s ability to build a global AI leader, arguing that the country has too often backed research whose commercial rewards flowed elsewhere. He said that’s especially dangerous with AI. “The most powerful AI systems are concentrated in a very small number of companies, in a very small number of countries,” Carney said. “That concentration carries risks: to cost, to resilience and to sovereignty.”

The financing follows Cohere’s agreement to combine with Germany’s Aleph Alpha, a deal designed to expand its European business and offer an alternative for customers concerned about relying on U.S. technology giants or Chinese AI developers. 

This isn’t Ottawa’s first commitment to Cohere. It previously pledged up to $240 million toward a $725-million project to buy compute at Cambridge, Ont., data centre being built by New Jersey-based CoreWeave. Cohere will be the facility’s anchor tenant. Federal Crown corporations BDC Capital and Export Development Canada have also invested in the company. 

Update: This story has been updated.