The AI hype train is still running at full tilt — just don’t ask where the profits are

In one respect, this is a positive sign for Cohere, with annualized revenue trebling from the end of 2023 to the end of the first quarter of 2024. It’s also fair to assume revenue has grown further since then.

Still, if you were to assume growth has happened at the same rate since the start of the year, the $5.5 billion valuation it secured this week would still far exceed the money it is generating by a hefty multiple.

The company also laid off about 20 employees after the raise, Fortune reported.

In a statement addressing the layoffs, a Cohere representative told Business Insider: “With our most recent round of financing in place, we have a clear vision for the future of Cohere, which has required some internal realignment.

“We will continue to aggressively hire people as we work to offer companies the most accurate, secure and private multilingual AI solutions in the market.”

On Tuesday, another startup — Harvey — announced a $100 million funding round led by Alphabet’s venture capital arm, Google Ventures. Its valuation now sits at $1.5 billion.

High expectations

In a blog, Winston Weinberg and Gabriel Pereyra — who founded Harvey as a startup that offers generative AI services to the legal sector — said its annualized recurring revenue had also tripled since its last fundraising in December.

Back then, the figure was about $10 million, The Information previously reported. That implies the annualized recurring revenue is now about $30 million, with a valuation 30 times greater, highlighting how high expectations are for Harvey.

It remains to be seen whether these companies can generate returns that warrant the hype surrounding them. Last year, veteran venture capitalist Vinod Khosla suggested most startups were overvalued and that most investments in AI “will lose money.”

Those throwing cash at AI can only hope he’s wrong.