Canada is becoming a shareholder in its own artificial intelligence champion. Prime Minister Mark Carney announced on October 29 in Montreal that the federal government will make an equity investment of up to C$1.6 billion, about US$1.1 billion, in Toronto-based AI company Cohere, in a deal that ties public money directly to the country's bid for technological sovereignty.
Unlike a grant, the investment buys the government an ownership stake. Ottawa stressed that the money will be paid in stages, with regular reporting on Cohere's progress against a set of commitments on jobs and investment in Canada. The exact size of the government's eventual shareholding was not disclosed.
A record round for Canadian tech
The announcement came alongside Cohere's own news: the initial close of a Series E funding round targeting up to C$7 billion at a C$35.7 billion valuation. Cohere called it the largest private financing round ever undertaken by a Canadian technology company. The company did not disclose how much capital was secured at the initial close.
Companies of Germany's Schwarz Group are leading the round. New investors include Bell Ventures, Bullhound Capital and the Government of Canada, while Inovia Capital, NVIDIA and Prosperity7 Ventures are returning backers. Schwarz Group's IT division, Schwarz Digits, plans to bring Cohere's technology to its STACKIT cloud infrastructure in Europe.
Cohere said it will use the funding to advance its models and products, build industry-specific AI systems for regulated businesses, and invest in the long-term computing infrastructure needed to train frontier-level enterprise models. The company reported that its annual recurring revenue grew 165 percent year over year at the end of the third quarter of 2026.
What Canada gets in return
In exchange for the investment, Cohere has committed to create at least 1,000 new high-paying Canadian technical jobs by 2030 and to put at least C$1.7 billion into additional computing infrastructure in Canada by the same year. The company will also maintain its Canadian incorporation and headquarters, invest in research partnerships at home, and keep working with the Canadian AI Safety Institute.
Carney framed the deal as a question of choice. "Today, true sovereignty depends on our ability to build, adopt, and govern AI on our own terms," he said, adding that the bigger and faster Cohere can scale, the more businesses and governments can control where sensitive data is stored, how it is used and who can access it.
The sovereign AI race heats up
Cohere, founded in Toronto, builds secure AI systems for businesses and governments that need tight control over their data. Its recent combination with Germany's Aleph Alpha brought Canadian and German AI expertise together, and the company points to a McKinsey projection that the sovereign AI market will reach $600 billion.
If the full C$7 billion round closes at the targeted valuation, Cohere would rank among the most valuable private AI companies outside the United States and China, close behind Europe's Mistral. The deal also signals a shift in how governments engage with AI: not just as regulators or customers, but as investors with a direct stake in the companies shaping the technology.
For Canada, the bet is that keeping a frontier AI lab at home is worth the price of admission. Whether the staged investment delivers the promised jobs and infrastructure will be measured in the regular progress reports Ottawa has promised, with 2030 as the deadline that matters.
