Cohere has agreed to a compute partnership with Aleph Alpha to secure additional scale and processing capacity for its foundation models.

TORONTO — Cohere and its German counterpart, Aleph Alpha, have finalized terms for their merger and are now seeking regulatory approval. The development comes as the Toronto-based firm races to secure computing capacity to close the performance gap with Silicon Valley’s AI leaders.

“Creating a joint, transatlantic Canadian-European champion will add tons of revenue and growth to the company,” Cohere CEO Aidan Gomez told The Logic. Gomez will lead the combined entity, which will retain the Cohere name.

First announced in April, the merger aims to establish a transatlantic champion capable of delivering sovereign AI solutions to clients seeking alternatives to U.S. and Chinese technology. While Cohere develops foundational AI models, Aleph Alpha now primarily focuses on sovereign software and services. The combination brings Aleph Alpha’s deep understanding of the European market and its established client base across German public and private sectors. Gomez noted that the firms’ technologies are complementary, highlighting Aleph Alpha’s “domain expertise in these highly-regulated European government and private-sector customers that need a set of guarantees for compliance.” Integrating this expertise will accelerate Cohere’s expansion into regulated industries.

Cohere has positioned its AI systems as ideal for the growing demand for sovereign technology, offering a viable alternative to commercially controlled U.S. platforms and open-source tools developed by Chinese laboratories. Gomez emphasized that Cohere aims to be more than a secondary option, noting the company is already winning contracts ahead of industry leaders like OpenAI and Anthropic. “Critical industries—that’s a place where our tech stack is just better,” he said on the sidelines of the Canada Investment Summit in Toronto on Tuesday.

Prominent clients include Royal Bank, hospital software developer Ensemble Health Partners, telecommunications providers such as Bell and STC Group, defense contractors Calian and Thales, alongside various federal government departments and intelligence agencies.

Clients can deploy Cohere’s models and the North agent-builder platform on their own infrastructure, ensuring complete data control and preventing the company from using customer data for further training. This capability is crucial for organizations bound by regulatory or security restrictions that prohibit storing data in public clouds or transferring it across borders. “Our tech stack serves their purposes better than what anyone else can offer, including OpenAI and Anthropic,” Gomez said.

Cohere declined to disclose the financial terms of the agreement. Upon closing, Aleph Alpha co-CEO Ilhan Scheer will assume the role of chief operating officer at the merged company. In a statement, Scheer noted that Cohere brings “global reach and deployment capabilities that complement our research expertise.” Aleph Alpha co-founder Samuel Weinbach will join as chief research officer. Martin Kon, formerly Cohere’s president, previously served as COO before stepping back from executive roles last fall.

Gomez acknowledged that Cohere’s current models lag behind frontier labs in specific areas, particularly coding and cybersecurity. “There’s a gap today, and we want to work to close that,” he said, emphasizing the importance of these capabilities for sensitive applications tied to “national security and the defence of our economies.”

Closing this performance gap requires scaling model size to compete with OpenAI and Anthropic. “Cohere is currently scaling up our models dramatically,” Gomez said, noting that system intelligence will rise accordingly. Previously, the company argued that smaller, customized models tailored for specific business applications could outperform larger rivals, operating on the premise that increased parameters do not automatically equate to superior performance.

Expanding model scale demands substantial processing power. “We’re investing heavily in compute,” Gomez said. “We’re trying to do that as much as we can in Canada and in Germany.” The company has secured partnerships with Bell and StackIt, a subsidiary of Aleph Alpha investor Schwarz Group. Cohere also lists semiconductor manufacturers Nvidia and AMD among its investors.

Recent agreements include a US$220 million contract with Buzz HPC to purchase capacity from a seven-megawatt Bell data center in British Columbia. For European operations, Cohere has committed to utilizing processing power from StackIt. Additionally, the company will secure 50 megawatts of capacity in Saudi Arabia from Humain, a state-backed artificial intelligence firm.

These figures remain modest compared to the trillions of dollars in compute commitments pledged by major cloud and AI providers. Cohere maintains that its required infrastructure footprint is smaller because many clients provide their own hardware. Nevertheless, Gomez warned that overall supply remains tight. “We’re feeling the pressure,” he said. “We’re sprinting and trying to lock down compute as quickly as possible.”

During the Canada Investment Summit and related Toronto events this week, Gomez highlighted Canada’s potential to expand AI data center development, pointing to the region’s cool climate and abundant clean energy. Both Anthropic and OpenAI have recently indicated interest in sourcing compute capacity from Canada.

Earlier this week, The Globe and Mail reported that Cohere was in advanced discussions to raise up to US$3 billion. Vice President of Communications Amanda Taggart declined to comment on the report but confirmed the company is “seeing strong interest in its upcoming Series E financing.”

Gomez noted that he has leveraged the summit to pitch global investors, who have responded positively to both Cohere and Canada’s broader AI ecosystem. “They want to invest and support the Canadian mission, because it’s going to be a high-growth, profitable one,” he said.

Recent major funding rounds were led by domestic investors including Radical Ventures, Inovia Capital, and the Public Sector Pension Investment Board. The Canada Pension Plan Investment Board also backs the company, representing a significant share of Canada’s growth-stage venture capital and pension fund landscape. Despite strong domestic backing, Gomez noted that the majority of capital raised to date originated from the United States, prompting the company to actively seek additional Canadian and European investment.

He added that while Canadian institutional investors support the firm, their current holdings represent relatively small positions. “There’s a ton of room for them to increase their position and support us,” Gomez said. “Decisively, no, Canada is not tapped out.”