Canada Shifts Toward Equity Stakes With Massive Cohere Investment

The Canadian federal government is pivoting its support for domestic tech from traditional grants toward direct equity ownership, as evidenced by a landmark investment in Toronto-based AI developer Cohere, as BetaKit first reported.

Prime Minister Mark Carney announced in Montréal that the government will invest up to $1.6 billion CAD in Cohere as part of a Series E funding round. According to BetaKit, this likely represents the largest single equity commitment the Canadian government has ever made to a tech company. The investment will be deployed in stages, and Cohere is required to provide regular reports regarding investments and jobs created within Canada.

Evan Solomon, the minister of AI and digital innovation, told BetaKit that the Cohere deal was negotiated through the Canada Development Investment Corporation. Solomon further noted that the $500-million Canadian Tech Growth Fund—originally introduced in the AI strategy—is designed to provide "flexible growth capital" and take equity positions in small and medium-sized firms to attract further capital. Solomon stated that the Cohere investment provides the government a "seat at the table" to help build and control the technology.

While the government has previously used loans and grants—such as the nearly $200 million CAD in repayable funds authorized for quantum firm Xanadu via the Strategic Response Fund—the scale of the Cohere deal marks a significant shift. This move aligns with a broader national security strategy identifying emerging technologies and critical minerals as priorities; the government previously announced plans to acquire a $400-million stake in Teck Resources. Industry minister Mélanie Joly previously described Cohere as a "Canadian champion" during the ALL IN conference last year.