TORONTO — Cohere will use $240 million in federal financing to help pay for a $725 million project to buy AI compute at a new Canadian data centre that will open this year, The Logic has learned.

The Toronto-based firm will be the anchor tenant for the new facility which New Jersey-based cloud computing firm CoreWeave is building.

The project will “help support Canadian technology development, and also help address data sovereignty needs, particularly for companies in highly regulated industries,” Cohere CEO Aidan Gomez said in a statement. 

Cohere doesn’t currently train its large language models in Canada because it can’t get the necessary compute here, co-founder Nick Frosst recently told The Logic. It’s previously used U.S.-based infrastructure from cloud service providers like Google.

CoreWeave’s new “multibillion-dollar” Canadian facility will allow Cohere to shift some of that activity north, “grounding them in the Canadian market,” said a senior government official. “Cohere is very vocal about their Canadianness, and we want that to stay that way,” the official added. The Logic is not naming the official because they were not authorized to publicly discuss the project.  

The federal government has received assurances that the CoreWeave facility, the location of which has yet to be announced, will come online this year, the official said. 

The $240 million in federal funding awarded to Cohere is the first deal under Ottawa’s $700 million AI Compute Challenge, which is designed to increase Canadian capacity by helping to finance new data centres or expansions of existing ones. Other companies will also be able to buy processing power from the new CoreWeave facility.  

The federal government first announced the award in December, but recently concluded negotiations with Cohere including the scope of the project, which has not previously been reported. 

Some Canadian data centre operators have criticized the federal government’s decision to use program funds for a project that will fund a capital project for CoreWeave, a U.S. rival. Cohere picked CoreWeave through a competitive process, Frosst said last month. 

The senior government official said the choice of data centre operator was up to Cohere, and that the deal is likely to be a one-off for the federal compute program in terms of size and structure. Cohere is the only Canadian AI firm large enough on its own to justify a cloud computing firm building new infrastructure in the country, the official said, making it an opportunity to attract foreign direct investment.

Going forward, the official said the federal program is likely to back projects in which Canadian firms are the suppliers rather than the buyers of compute. The program has received applications for projects in which domestic firms would build and operate data centres, but also ones that would use homegrown chips and other technology.