{"id":958101,"date":"2026-11-04T14:30:33","date_gmt":"2026-11-04T14:30:33","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/958101\/"},"modified":"2026-11-04T14:30:33","modified_gmt":"2026-11-04T14:30:33","slug":"ottawas-mega-investment-in-cohere-sparks-debate-over-how-to-best-support-ai-sector","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/958101\/","title":{"rendered":"Ottawa\u2019s mega-investment in Cohere sparks debate over how to best support AI sector"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Mark Carney, centre, flanked by Aiden Gomez, left, co-founder and CEO of Cohere and Minister of Artificial Intelligence and Digital Innovation Evan Solomon, right, announces an investment of up to $1.6 billion in Canadian AI company Cohere, in Montreal on Oct. 29.Christinne Muschi\/The Canadian Press<\/p>\n

To understand the scale of Ottawa\u2019s recent pledge to invest up to $1.6-billion to own part of Canadian AI company Cohere Inc., consider the following. <\/p>\n

The amount is more than three times the size of the proposed $500-million Canadian Tech Growth Fund, which will provide promising companies with financing. It\u2019s also more than the $1-billion federal program called the AI Compute Access Fund that helps subsidize AI processing costs for companies. And it\u2019s almost as much money as the $1.75-billion Ottawa has budgeted<\/a> to boost Canadian venture capital funding as a whole. <\/p>\n

The federal government\u2019s direct investment in seven-year-old Cohere \u2013 unprecedented for a single private tech company \u2013 has kicked off a debate among tech founders and policy experts about sovereignty, and how best to support the country\u2019s AI sector. Some question whether it makes sense to devote so much public money to one company, or whether it should be spread around. Others want the government to get out of the way entirely. And many wonder whether Cohere can compete against U.S. AI giants OpenAI and Anthropic.<\/p>\n

Prime Minister Mark Carney<\/a> announced last Thursday that the federal government would be taking an equity stake in Toronto-based Cohere<\/a> as part of a planned $7-billion funding round that values the company at $35.7-billion. As part of the deal, Cohere pledged to spend $1.7-billion to develop compute capacity in Canada and to create 1,000 new engineering and other technical jobs in the country, both by 2030. It has also promised to remain headquartered and incorporated in Canada.<\/p>\n

Anthropic sets stage for blockbuster IPO, highlighting AI\u2019s benefits and risks for humanity<\/a><\/p>\n

\u201cTo support a Canadian champion to gain scale, I think, will have a positive impact also for the whole ecosystem,\u201d Finance Minister Fran\u00e7ois-Philippe Champagne said in a brief interview Monday. Asked whether Ottawa is considering similar deals for other companies, Mr. Champagne said Cohere is \u201cunique in many ways,\u201d citing its domestic growth plans and export ambitions.<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Signage for Cohere, a Canadian artificial intelligence company, is seen at the Ottawa convention centre that bears its name.Justin Tang\/The Canadian Press<\/p>\n

There are still unknowns about the deal, according to Jim Balsillie, chair of the Council of Canadian Innovators and former co-chief executive officer of BlackBerry Ltd. \u201cThis has red flags all over it,\u201d he said. It is not yet clear how and where Cohere will spend on AI infrastructure, the state of its finances and what rights the government would have if a foreign outfit made an offer to buy the company. <\/p>\n

Neither Cohere nor the Canada Development Investment Corporation \u2013 the Crown corporation that will hold the stake on behalf of the federal government \u2013 directly answered questions about whether the deal gives Ottawa a board seat or veto rights over a potential sale. Both cited commercial confidentiality.<\/p>\n

The direct equity stake in Cohere marks a departure from Canada\u2019s historical approach to backing the tech sector, said Martin Weiss, co-founder of Tiptree Systems, a Montreal-based startup that develops AI research tools. \u201cWe saw the ecosystem grow and flourish based on a lot of small bets and on investments in public infrastructure,\u201d he said. <\/p>\n

Cohere announces plan to buy European AI cybersecurity startup Aisle<\/a><\/p>\n

The Cohere deal also marks the next phase of the more interventionist approach to industrial policy the federal government is taking under Mr. Carney, mirroring a trend in other advanced economies. While Ottawa has long provided repayable financing to companies for megaprojects and manufacturing expansions through its innovation programs, the 2025 federal budget committed<\/a> $2-billion for a new fund that could take equity stakes in mining companies producing critical minerals. <\/p>\n

For the tech sector, though, Mr. Weiss favours programs like the AI Compute Access Fund, which he said is more meritocratic. \u201cIt\u2019s the government\u2019s job to make Canada an attractive place to build for every new company, not to make concentrated bets in a few companies,\u201d he said. <\/p>\n

Mr. Balsillie, meanwhile, questioned how having Canadian-made large language models, which power chatbots and other AI applications, strengthens sovereignty. There is no shortage of open-weight models that businesses and governments can use as an alternative to commercial models from OpenAI and Anthropic. \u201cThere are so many LLMs out there, and they\u2019re commodifying,\u201d Mr. Balsillie said. \u201cI\u2019m not against a company trying to build an LLM, but what does this give us at the end of the day?\u201d<\/p>\n

Plenty, said Daniel Eberhard, CEO of Koho Financial Inc., a Toronto-based fintech company. \u201cThis is a really important national infrastructure,\u201d he said, adding that Ottawa\u2019s investment in Cohere is akin to one in a defence or space company. <\/p>\n

Canada needs sovereign control over every layer of the AI technology stack, according to Mr. Eberhard \u2013 from energy, to compute, to AI model outputs, to applications. Cohere is the leading Canadian player in AI model outputs, he said. <\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Prime Minister Mark Carney, talks to Aiden Gomez, co-founder and CEO of Cohere as he leaves a press conference announcing an investment in Cohere.Christinne Muschi\/The Canadian Press<\/p>\n

The participation from other players in its recent funding round, such as Nvidia Corp. NVDA-Q<\/a>, is proof that investors have confidence Cohere can deliver returns, Mr. Eberhard said. Taking an equity stake is also a better deal than the one Ottawa usually gets when it provides companies with grants. \u201cI\u2019m glad that the government is seeking returns rather than just giving away money,\u201d he said.<\/p>\n

Still, Cohere remains much smaller than its U.S. rivals. San Francisco-based Anthropic PBC could reportedly seek a US$2-trillion valuation in its coming initial public offering, and the maker of Claude filed financial documents last week showing that it earned US$16.3-billion in revenue during the first six months of the year.<\/p>\n

Cohere has long argued it doesn\u2019t need as much money or compute as the likes of Anthropic and OpenAI because its tools are designed for businesses and government departments, not consumers. \u201cI don\u2019t think it\u2019s just, \u2018Who has the biggest balance sheet wins,\u2019\u201d said Lee Hower, a partner at U.S. venture capital company NextView Ventures. Still, \u201cinvestment that goes into compute is really a huge driver of how model companies can stay at the forefront.\u201d<\/p>\n

Ottawa to build sovereign AI ecosystem for Canadian defence operations<\/a><\/p>\n

Charles Lammam, a senior adviser to the C.D. Howe Institute, wrote on Substack<\/a> that it is \u201ctotally inappropriate\u201d for Ottawa to deploy capital in this way, and said that Cohere was able to raise billions of dollars from private sector investors as part of its latest round. \u201cA company that has lined up all that money privately does not obviously need a federal co-signer,\u201d he wrote. <\/p>\n

But other countries, notably the U.S. and China, have made similar investments to support important companies. The U.S. took a 9.9-per-cent stake<\/a> in chip maker Intel Corp. INTC-Q<\/a> last year, for example. <\/p>\n

\u201cGovernment equity investments in strategic technology companies seem to have become table stakes, and we\u2019re getting to the table last,\u201d said Jaxson Khan, founder of consultancy Aperture AI, who added that Cohere is important from both an economic and national-security perspective. \u201cAny other middle power would dream of having a credible major AI company that is trusted by governments and enterprises around the world.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Mark Carney, centre, flanked by Aiden Gomez, left, co-founder and CEO of Cohere…\n","protected":false},"author":2,"featured_media":958102,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[194295],"tags":[901,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,20739,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-958101","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ottawa","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-ottawa","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/958101","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=958101"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/958101\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/958102"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=958101"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=958101"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=958101"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}