In a marked shift from the AI industry’s race to build ever-larger foundation models, Toronto-based AI startup Cohere has found success by focusing on enterprise-specific solutions. The company has doubled its annualized revenue to $100 million as of May 2025, according to Reuters, highlighting the growing demand for secure, customized AI tools in regulated industries.

Strategic Pivot Yields Results

Cohere’s impressive growth follows a strategic repositioning that began in the third quarter of 2024, when the company decided to emphasize private deployments tailored specifically for customers in sectors such as finance, healthcare, and government. CEO Aidan Gomez outlined this new direction in a year-end memo, prioritizing customized models for enterprise users over larger foundation models that competitors like OpenAI and Anthropic have pursued.

The results speak for themselves: approximately 85% of Cohere’s business now comes from these private deployments, with profit margins reaching an impressive 80%. Most of the revenue stems from long-term contracts, providing the company with a stable financial foundation.

“The growth followed a strategic shift in the third quarter of 2024 with a focus on private deployments tailored for customers in sectors such as finance, healthcare and government,” Reuters reported.

Revenue Trajectory and Market Position

The company’s financial journey shows remarkable acceleration. According to data from Tap Twice Digital, Cohere generated approximately $30 million in revenue in 2024, representing a 131% increase from $13 million in 2023. Earlier projections suggested the company would reach $70 million in revenue for 2025, but the latest figures indicate they’ve already surpassed that mark substantially.

However, The Information offers a more nuanced perspective, reporting that as of February this year, “Cohere was on pace to generate just $70 million in revenue annually from licensing its AI models to enterprises,” suggesting the company has seen extraordinary growth in the most recent quarter.

Founded in 2019, Cohere has secured more than $900 million in funding from investors including tech giants Nvidia and Cisco, as well as Inovia Capital. The company’s last valuation stood at $5.5 billion following its Series D funding round in July 2024, representing a 2.5x increase from its previous valuation of $2.2 billion.

Product Innovation and Enterprise Adoption

As part of its enterprise-focused strategy, Cohere launched “North” in January, a ChatGPT-style application designed to help knowledge workers with tasks such as summarizing documents. The product is currently being tested with select customers, including Royal Bank of Canada and LG.

“This strategic focus is further underscored by the launch of ‘North,’ a ChatGPT-style application designed to assist knowledge workers with tasks like document summarization,” noted IndexBox.

Cohere’s client roster includes major corporations such as Fujitsu, Oracle, and Notion, demonstrating its growing presence in the enterprise AI market.

Industry Implications

Cohere’s pivot toward smaller, specialized models reflects a broader trend in the AI sector. Companies are increasingly prioritizing domain-specific tools over large, generalized systems as AI labs report diminishing returns from scaling up model size—a strategy that once drove major breakthroughs.

This approach differentiates Cohere from competitors like OpenAI and Anthropic, which continue to focus on developing increasingly powerful general-purpose models. By targeting specific enterprise needs in regulated industries with secure, customized solutions, Cohere has carved out a profitable niche that’s proving increasingly attractive to businesses with specific compliance and security requirements.