Canadian AI startup Cohere has raised $450 million in funding from returning investors such as Nvidia and Salesforce Ventures, as well as new investors including Cisco and Canadian pension fund PSP Investments, according to a source familiar the matter.

This concludes the first tranche of Cohere’s monthslong fundraising efforts, while the company is still in talks to raise more in the same round at $5 billion valuation, added the source, speaking on condition of anonymity.

The funding marks a jump in valuation from Cohere’s last private raise, when it was valued at $2.2 billion from investors including Inovia Capital last June.

The generative AI company, which makes money by selling its models and applications to enterprises with a emphasis on data privacy, generated $35 million in annualized revenue by the end of March, up from $13 million last year, the source added.

Cohere declined to comment. Nvidia and Salesforce did not immediately reply to requests for comment.

Cohere was set out to raise between $500 million to $1 billion. It competes with OpenAI, Anthropic and Mistral, which have also raised billions of dollars of strategic investors such as Microsoft, Google and Amazon.

Foundation model AI companies have been racing to raise capital to fund the expensive development of AI models that require huge amounts of computing power and top industry talent.

One of the most high-profile Canadian startups, Cohere is likely to benefit from the Canadian government’s plan to invest C$2.4 billion ($1.77 billion) to fund compute and AI research for homegrown AI companies.

Founded in 2019, Toronto-headquartered Cohere builds large language models – software systems that are trained on large amounts of data and can generate text. Unlike OpenAI’s tie-up with Microsoft, it has steered clear of exclusive deals with cloud providers, despite being backed by Oracle.

While AI startups largely remain money-losing given the training cost, every company is trying to sell its technology to the biggest companies that can pay for it for boosted productivity. Showing revenue growth is also critical in deciding if they could raise more capital.

The funding craze of AI startups is already slowing down, especially on the early stage side. Venture capital deal value for pre-seed and seed-stage AI deals dropped by 76% in the first quarter this year to $122.9 mil