Why Cohere’s $5.5 Billion Valuation Isn’t What It Seems; Perplexity’s Data Sources Draw Questions

On Monday, Cohere, a Canadian large language model developer, announced it had raised $500 million in a deal led by Canadian pension fund PSP Investments at a $5.5 billion valuation, confirming our report from March.

That valuation isn’t cheap. Around the time of the investment, the startup was generating $35 million in annualized revenue, according to a person briefed on the financials. (Annualized revenue typically reflects last month’s revenue multiplied by 12, implying it was generating about $2.9 million per month as of March.)

That means the pension fund valued Cohere at more than 140 times its forward revenue—that's a lot even by AI standards. For instance, OpenAI and Anthropic—both of which generate many times more revenue than Cohere—were last valued at 54 and 75 times their forward revenue, respectively. (Check out this past newsletter for more on how investors have been valuing AI startups.)

Are the Canadian investors off base? It’s not that straightforward.