AI startup Cohere, a rival of GPT creator OpenAI that also develops foundation models used in generative AI, on Thursday said it raised $270 million in series C venture funding, much of it from AI hardware/software giant Nvidia, Salesforce Ventures and Oracle.
Tech venture capital firm Inovia Capital led the funding round, joined by other venture capital firms in addition to the tech vendors.
Cohere's funding round comes amid dramatic momentum in the generative AI market, which is projected to reach $126.5 billion by 2031.
Cohere's AI platform is cloud agnostic, meaning it's available on every cloud provider.
While big tech vendors such as Google and Microsoft also offer foundation models, few startups play in the market, noted Nick Patience, co-founder and analyst at S&P Global Market Intelligence.
Cohere's specialty in making foundation models that others can build on makes them attractive to large technology providers such as Nvidia and Oracle that make AI chips such as GPUs and other powerful computing hardware, Patience said.
Nick PatienceCo-founder and analyst, S&P Global Market Intelligence
"Nvidia obviously has a vested interest in the success of generative AI," he said. "These models, which are deep learning models, require GPUs to work and to be trained."
Nvidia also has partnerships with other notable providers in the generative AI market. For example, in May, Nvidia revealed partnerships with Microsoft and Dell. Nvidia is also working with Google Cloud and AWS.
For its part, Oracle might see its investment as just an excellent financial opportunity, Patience said. As a cloud vendor, Oracle also hopes generative AI succeeds.
Not many alternatives
However, despite the generative AI boom, venture capitalists are being cautious with investments amid an uncertain larger economy, Patience said.
And while there is much investor interest in text-, image- and code-generating model vendors, many venture capitalists think foundation model providers could be the leaders in generative AI.
"[Investors] are obviously in some ways placing a bet that the value in the generative AI market will accrue to foundation model providers," Patience said.
This kind of investment remains strong despite the risk that some vendors are just slapping generative AI overlays on classic AI products and features.
For Cohere, its main challenge is taking on the clout of the big cloud vendors, all of which boast their own foundation models. While some of the cloud providers are investors, others are competitors. Therefore, the hurdle for Cohere and smaller foundation model providers is convincing enterprises to pick them regardless of which cloud platform they're on.
Founded in 2019 by ex-Google researchers, Cohere has raised more than $440 million.
Esther Ajao is a news writer covering artificial intelligence software and systems.