The Government of Canada is taking an equity stake in Cohere, joining a funding round the Toronto AI lab says will be the largest private capital raise in Canadian history. The Cohere funding round, which closed its initial tranche on Thursday, targets up to C$7 billion (about $4.49 billion) at a C$35.7 billion valuation, according to Cohere’s official announcement.

Companies of Germany’s Schwarz Group, the retail conglomerate behind Lidl and Kaufland, committed as the lead investor. New institutional and strategic investors include Bell Ventures, Bullhound Capital and the Government of Canada, while Inovia Capital, NVIDIA and Prosperity7 Ventures are returning investors, the company said.

“Today we are announcing the initial close of our Series E, a record-setting round that marks the largest private capital raise in Canadian history,” said Aidan Gomez, Cohere’s CEO and co-founder. “This is a huge honour, not only for Cohere but for the country as the government’s investment highlights Canada’s leadership in the global AI revolution.”

What the money is for

“Cohere will use the funding to advance our modelling and product roadmap, develop fully verticalized AI solutions for regulated industries, and invest in long term compute infrastructure needed to train frontier-level enterprise models,” said Francois Chadwick, the company’s chief financial officer. He added that Cohere will keep scaling across North America, EMEA and APAC to meet growing customer demand.

The round has so far completed only an initial close. Cohere did not say how much has been committed to date or when it expects the round to close, Reuters reported. Ottawa did not disclose the size or terms of its stake, though Cohere said it made commitments to the government to support Canada’s economic vision and grow the country’s sovereign AI ecosystem.

Cohere Series E key figures
Cohere’s Series E by the numbers. Source: Cohere, Oct 29, 2026. Graphic: GPTOnline

Ottawa’s bet on sovereign AI

Prime Minister Mark Carney framed the equity investment as a sovereignty play: “Canada’s investment in Cohere is an investment in choice, in security, and in our ability to live our lives as we choose. Today, true sovereignty depends on our ability to build, adopt, and govern AI on our own terms.”

The Honourable Evan Solomon, Minister of Artificial Intelligence and Digital Innovation, added: “It is not enough for great companies to start in Canada. We want them to grow here, build here and create good jobs here. … Investing in Cohere sends a clear message: you should not have to leave Canada to build a company that succeeds around the world.”

A transatlantic AI axis

The Schwarz Group commitment extends a relationship that began in April, when the company pledged 500 million euros to lead the round as part of Cohere’s business combination with German AI developer Aleph Alpha, according to Reuters. Schwarz, which owned more than 20 percent of Aleph Alpha, has spent 16 billion euros on new data centres in Germany.

“Digital sovereignty is about strategic choice, interoperability and holding the keys to our own data,” said Christian Müller, CEO of Schwarz Digits, the group’s IT and digital arm. “Our clear goal is to anchor these frontier capabilities in our sovereign STACKIT cloud infrastructure.”

Cohere has been expanding aggressively in 2026, adding Aleph Alpha, Reliant AI and AISLE to strengthen its platform across sovereign AI, healthcare and cybersecurity, the company said. Its enterprise pitch centers on AI that organizations can own and govern themselves, deployed in private clouds, on premises or fully air gapped, a positioning aimed squarely at regulated industries wary of US hyperscalers.

Cohere Series E investor lineup
Who is backing Cohere’s Series E. Source: Cohere, Oct 29, 2026. Graphic: GPTOnline

Why it matters

The numbers explain the urgency. Cohere ended the third quarter of 2026 with 165% year-over-year annual recurring revenue growth, and its customer base grew twentyfold over the past year to 300 customers, including RBC, Bell Canada, Fujitsu, TD Bank and PwC. The company puts the sovereign AI market at $600 billion, citing McKinsey, calling it one of the fastest-growing segments of the global AI economy.

Direct government equity in a frontier AI lab remains rare, and Ottawa’s move, paired with a German industrial giant’s lead check, turns Cohere into the clearest test yet of whether a transatlantic, sovereignty-first AI champion can scale against the US labs. With the round still open and no close date announced, the next marker to watch is how much of the C$7 billion target actually gets committed.

Sources