The venture capital firm Tiger Global Management LLC is looking to cash in on an astute early investment in the artificial intelligence startup Cohere Inc., according to a report today by The Information.

The report says Tiger Global is looking to sell a 2.1% stake in Cohere for about $63 million, equal to the dollar amount of its initial investment in the startup. It represents a 40% markup on Cohere’s current valuation of $2.2 billion, the report said.

It doesn’t plan to wash its hands of the startup, though. Following the proposed sale, Tiger Global will still retain a stake of about 5% in Cohere.

Cohere is a Canadian AI startup that rivals ChatGPT creator OpenAI LP. Led by Chief Executive Aidan Gomez, a former AI researcher at Google LLC, it offers access to a selection of generative AI models through cloud-hosted application programming interfaces. Its models are optimized to generate text based on user’s prompts, similar to ChatGPT. It can be used to create marketing copy such as product descriptions, summarize documents, power customer support chatbots and more.

The startup has also created some more specialized AI models, including one that’s geared specifically toward text summarization, and another that’s designed to handle website search. A third model can transform words into vector embeddings, a data format that AI applications can process more easily than raw text.

Like OpenAI, Cohere also allows customers to fine-tune its AI models by training them on their proprietary datasets. In this way, customers can train Cohere’s models to perform more specific tasks, speak in a certain way and so on. In addition, it provides a big advantage by allowing customers to deploy these models on any cloud platform or in their own data centers.

The company is one of a number of AI startups that has cashed in on the buzz around ChatGPT and generative AI. In June, it closed on a bumper $270 million funding round led by Nvidia Corp., Oracle Corp., Salesforce Inc., SentinelOne Inc. and other participants, including Inovia Capital.

It’s not clear if Tiger Global also participated in the most recent round, but the VC firm was actually far more astute, leading Cohere’s $159 million Series B round back in February 2022, at a time when generative AI technology was still largely unknown.

Gomez founded Cohere back in 2019 alongside his co-founders Nick Frosst and Ivan Zhang, two years after he co-authored a groundbreaking academic paper on the concept of “Transformers,” which has since emerged as one of the most significant breakthroughs in AI technology.

Transformers are a special kind of neural network optimized to process text. They sit at the heart of Cohere’s AI models, and can understand and generate prose with much higher accuracy than earlier neural networks. They are also superior in tasks such as writing software code. OpenAI’s GPT-4, which powers ChatGPT, is also a transformer model.

Although transformers have been around for six years, Gomez has stated that we’ve only seen a taste of what these models will ultimately be capable of.

“I think in the next year, we’re going to see some major changes,” Gomez said in an interview on SiliconANGLE’s theCUBE in March. “You’ve already seen the very first hints of that with stuff like Bing Chat, where you augment these dialog models with an external knowledge base. Now the models can be kept up to the date to the millisecond because they can search the web.”

Image: Cohere