Canada's Government Just Bought Into Cohere's Richest Valuation Yet

Mark Carney stood in Montréal on Thursday and did something no Canadian prime minister has done for a private AI company: he committed public money to a venture round. The federal government, through the Crown-owned Canada Development Investment Corporation, will put up to C$1.6 billion into Cohere's Series E, part of a financing the Toronto company is marketing at up to C$7 billion — which would make it the largest startup raise in Canadian history, at a post-money valuation near C$36 billion.

The round is being led by Germany's Schwarz Group, the retail conglomerate that became a major Cohere shareholder after bankrolling the company's merger with German rival Aleph Alpha this spring. New backers include Bell Ventures and Luxembourg's Bullhound Capital; Inovia Capital, Nvidia and Saudi Aramco's Prosperity7 Ventures are returning. An initial close has been announced, with Cohere saying it has already secured most of the target. In exchange for its slice, Cohere is promising C$1.7 billion in Canadian compute infrastructure and more than 1,000 tech jobs by 2030 — commitments the government says will be checked against milestones before later tranches of its money go out.

The multiple problem

What the government isn't saying is the price it's paying relative to what Cohere actually earns. The company's annualized revenue hit roughly $240 million by February, ahead of its own $200 million year-end-2025 target and growing more than 50 percent quarter over quarter — genuinely good numbers for an enterprise AI vendor. But stacked against a $7 billion valuation last September, that was already about 29 times revenue. Stacked against a ~$23 billion-equivalent valuation now, even assuming Cohere's growth has kept pace, the multiple is in territory that would make most public-market investors wince — and this isn't the first time Cohere has asked for it. Back in 2024, the company sought a $6 billion valuation on roughly $13 million of annualized revenue, a multiple north of 450x at a moment when OpenAI, the company it's supposedly racing, was trading closer to 50 times forward revenue. Cohere has consistently priced itself as a frontier lab while reporting the revenue of an enterprise software vendor; what's new is that Ottawa is now the one paying that price with taxpayer money instead of a venture fund absorbing it.

Minister Evan Solomon declined to disclose the commercial terms of the government's stake — what class of equity it holds, what protections it carries, or how the valuation was set. Carney has said the investment is being made on a "commercial basis," but Crown corporations don't typically publish term sheets, and nothing in the announcement suggests this one will. That opacity matters more here than in a typical late-stage round, because the usual market discipline — a syndicate of sophisticated investors independently pricing the deal — is being supplemented by a government that has spent over a year publicly promoting Cohere as a national champion, which is not an incentive structure built for skepticism.

Not a one-off

Solomon told BetaKit this won't be Ottawa's last equity stake in a Canadian tech company. A planned C$500 million Canadian Tech Growth Fund — roughly a third the size of the Cohere commitment alone — is being designed explicitly to take equity positions in smaller companies, a structural departure from how Canada has historically backed its tech sector. The government's usual instruments have been loans, grants and repayable contributions — it gave Cohere a roughly $240 million commitment for a data centre in 2025 on those terms, and backed quantum startup Xanadu with a roughly $200 million repayable investment more recently. Direct equity exposure to startup-style risk, in a round priced by a syndicate that includes the company's own biggest shareholder, is a different bet entirely.

It also fits a pattern that has nothing to do with AI specifically: Washington took a 10 percent stake in Intel in 2025, and Canada itself is finalizing a roughly $400 million position in miner Teck Resources. Governments are increasingly treating ownership stakes in "strategic" companies as a policy tool, not just a financing backstop. The difference with Cohere is that chipmakers and miners have decades of production data to value against; Cohere is being priced on a narrative about where enterprise AI spending is headed, with the Canadian government now holding part of the bill if that narrative is wrong.

Cohere gets a validation boost it can wave at every enterprise customer deciding whether to bet on a Toronto challenger over OpenAI or Anthropic, and Ottawa gets to say it has "a seat at the table" in an industry it has decided is too important to watch from the sidelines. Whether that seat is worth $1.6 billion in public money will depend on whether Cohere's revenue eventually catches up to a multiple that history suggests it has never quite reached before.