Canada Signals Shift Toward Equity Stakes in Tech with Cohere Investment

The Canadian federal government is moving toward a more direct ownership model in the tech sector, as evidenced by a new 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 investment—likely the largest single government equity commitment to a tech firm in Canadian history—will be deployed in stages. Cohere is required to provide regular reports regarding investments and job creation within Canada.

AI and digital innovation minister Evan Solomon told BetaKit that while the Cohere deal was negotiated via the Canada Development Investment Corporation, a Crown corporation, future investments will flow through a new vehicle. The $500-million Canadian Tech Growth Fund, first introduced in the national AI strategy, is designed to provide "flexible growth capital" and take equity positions in small and medium-sized companies to attract further capital. Solomon told BetaKit that the Cohere investment provides Canada with a "seat at the table" to help build and control the technology.

While Canada has previously used loans and grants—such as the nearly $200 million CAD in repayable funds recently authorized for quantum firm Xanadu via the Strategic Response Fund—the shift toward equity is becoming more pronounced. This trend extends beyond AI; the federal government also announced plans this summer to acquire a $400-million stake in Teck Resources, a critical minerals company. Both emerging tech and critical minerals were highlighted in the government's new national security strategy, as announced today. Industry minister Mélanie Joly previously described the goal of making Cohere a "Canadian champion" during the ALL IN conference last year.