AI startup Cohere cuts staff after $500 million funding round

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Aidan Gomez, co-founder and chief executive officer of Cohere Inc., during a panel session on the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 16, 2024. Cohere, the artificial intelligence startup founded by ex-Google AI researchers and backed by Nvidia , cut about 20 roles on Tuesday, CNBC confirmed. The layoffs at Cohere, which had about 400 employees according to the company, follow the completion of a $500 million funding round from investors including AMD , Salesforce, Oracle and Nvidia that valued the company at $5.5 billion — more than doubling its valuation from last year. Despite the cuts, Cohere is hiring in areas such as customer operations, partnerships, revenue, sales, product design and modeling, according to its website. Founded by ex-Google AI researchers and backed by Nvidia, Cohere's business model has centered on generative AI for the enterprise rather than on consumer chatbots, which have been the talk of the tech industry since OpenAI released ChatGPT in late 2022. In June 2023, Cohere raised $270 million at a $2.2 billion valuation, with Salesforce and Oracle participating in the funding round. Company executives have also attended AI forums at the White House. "With our most recent round of financing in place, we have a clear vision for the future of Cohere, which has required some internal realignment," a representative for the company told CNBC in a statement. "We will continue to aggressively hire people as we work to offer companies the most accurate, secure and private multilingual AI solutions in the market." Fortune first reported on the job cuts. The generative AI field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, a more than 260% increase in deal value from a year earlier, according to PitchBook. It's become the buzziest phrase on corporate earnings calls quarter after quarter, and some form of the technology is automating tasks in just about every industry, from financial services and biomedical research to logistics, online travel and utilities. Some of Cohere's competitors in the AI arms race offer products for both consumers and businesses. OpenAI, for instance, launched ChatGPT Enterprise last August, and Anthropic opened up consumer access to its formerly business-only Claude chatbot last July. Cohere president and Chief Operating Officer Martin Kon told CNBC in March that by staying focused on enterprise AI, the company is able to run efficiently and keep costs under control even amid a chip shortage, rising costs for graphics processing units (GPUs) and ever-changing licensing fees for AI models. Current clients include Notion, Oracle and Bamboo HR, according to Cohere's website. Many customers include businesses in banking, financial services and insurance, Kon told CNBC in the past. In November, Cohere told CNBC it saw an uptick in customer interest after OpenAI's sudden and temporary ouster of CEO Sam Altman. In March, Kon acknowledged that changing dynamics in the hardware industry have presented persistent challenges. The company has had a reserve of Google chips for well over two years, Kon said at the time, secured in Cohere's early days to help it pretrain its models. Now, Cohere is moving toward using more of Nvidia's H100 GPUs, which are powering most of the latest large language models.