Cohere, Backed by Nvidia, Cuts 20 Roles Following $500 Million Funding Round

Cohere Layoffs: Despite the layoffs, Cohere, which has about 400 employees, continues to hire in key areas such as customer operations, partnerships, revenue, sales, product design, and modeling

Cohere Layoffs: Cohere, the artificial intelligence start-up founded by former Google AI researchers and backed by Nvidia, has cut about 20 roles, a report by CNBC has revealed. The layoffs come shortly after Cohere completed a $500 million funding round from prominent investors, including AMD, Salesforce, Oracle, and Nvidia.

This investment valued the company at $5.5 billion, more than doubling its valuation from the previous year. Despite the layoffs, Cohere, which has about 400 employees, continues to hire in key areas such as customer operations, partnerships, revenue, sales, product design, and modeling, as stated on its website.

Cohere, established by ex-Google AI researchers and supported by Nvidia, focuses on generative AI for enterprises, distinguishing itself from the consumer chatbot trend that has gained significant attention since OpenAI released ChatGPT in late 2022. In June 2023, Cohere raised $270 million at a $2.2 billion valuation, with Salesforce and Oracle among the investors. Company executives have also participated in 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 was the first to report on the job cuts.

The generative AI sector has seen explosive growth over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, marking a more than 260% increase in deal value from the previous year, according to PitchBook. Generative AI has become a buzzword in corporate earnings calls, with its applications automating tasks across industries such as financial services, biomedical research, logistics, online travel, and utilities.

Cohere's competitors in the AI industry offer products for both consumers and businesses. For example, OpenAI launched ChatGPT Enterprise last August, and Anthropic made its formerly business-only Claude chatbot accessible to consumers last July.

Cohere President and Chief Operating Officer Martin Kon told CNBC in March that focusing on enterprise AI enables the company to operate efficiently and manage costs despite challenges such as a chip shortage, rising GPU costs, and fluctuating AI model licensing fees. Current clients include Notion, Oracle, and Bamboo HR, with many customers in the banking, financial services, and insurance sectors. Cohere reported an increase in customer interest following OpenAI’s sudden and temporary removal of CEO Sam Altman last November.

In March, Kon acknowledged that the evolving hardware industry dynamics present ongoing challenges. The company has maintained a reserve of Google chips for over two years, secured during Cohere’s early days to pretrain its models. Now, Cohere is transitioning to using more of Nvidia’s H100 GPUs, which power the latest large language models.