Canada Pivots to Venture Model With Massive Cohere Investment
AI-generated image · Bay Street Wire
The federal government's $1.6 billion equity stake in an AI developer signals a shift toward active ownership in strategic industries.
The Canadian government is moving away from traditional grant-giving toward a direct equity model, 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 federal government will invest up to $1.6 billion CAD in Cohere as part of a Series E funding round.
According to BetaKit, this commitment likely represents the largest single equity investment the Canadian government has ever made in a tech company. The funding will be deployed in stages, and Cohere is required to provide regular reports regarding investments and job creation within Canada.
While the government has historically provided support through loans, grants, and arm's-length Crown corporations like the Business Development Bank of Canada, this new approach emphasizes direct ownership. In a conversation with BetaKit, AI and digital innovation minister Evan Solomon explained that the Canada Development Investment Corporation negotiated the Cohere deal. Solomon further noted that the upcoming $500-million Canadian Tech Growth Fund will also be designed to take equity positions in small and medium-sized companies to attract further capital and ensure the government has a "seat at the table."
This shift aligns with a broader national security strategy identifying emerging technologies and critical minerals as top priorities. BetaKit reports that the government recently announced plans to acquire a $400-million stake in Teck Resources, a critical minerals firm. This trend mirrors global shifts in industrial policy, such as the U.S. government's 10 percent purchase of chip maker Intel under President Donald Trump.
Previously, the government's support for the sector included nearly $200 million CAD in repayable funds for quantum company Xanadu through the Strategic Response Fund. However, the scale of the Cohere deal follows industry minister Mélanie Joly's previous declaration that the government intended to make the AI developer a "Canadian champion."