Toronto-based venture firm Radical Ventures raises nearly $800 million for AI start-ups

Toronto-Based Venture Firm Radical Ventures Raises Nearly $800 Million for AI Start-Ups

Toronto-based venture capital firm Radical Ventures has successfully raised nearly $800 million to establish the largest venture capital fund dedicated solely to artificial intelligence (AI). This significant fund will focus on supporting growth-stage AI start-ups, positioning Radical Ventures as a pivotal player in the AI investment landscape.

The newly raised fund is the firm’s third institutional fund, following a $550 million fund established in the previous year dedicated to early-stage companies, and a $350 million fund in 2019. Radical Ventures, co-founded by Jordan Jacobs and Tomi Poutanen in 2017, has quickly become a leader in supporting nascent AI technologies.

People familiar with the matter have revealed that key investors in Radical Ventures include prominent figures and institutions such as former Google CEO Eric Schmidt’s family office, Stanford computer science professor Fei-Fei Li, often referred to as the “godmother of AI,” and former Google Brain executive Geoffrey Hinton. In addition, several significant Canadian pension funds are backing this endeavour, including CPP Investments, which has publicly disclosed committing $75 million to the new fund, bringing its total contributions to Radical Ventures to $204 million.

Jordan Jacobs, co-founder and managing director of Radical Ventures, acknowledged the mixed sentiments surrounding AI investments. “There is certainly a hype cycle in some parts of venture and AI,” said Jacobs. Nevertheless, he remains optimistic about the potential of AI, emphasizing that the current phase of the industry presents opportunities for substantial growth.

Radical Ventures was conceived at a time when AI was still an emerging field, and its founding duo, Jacobs and Poutanen, envisioned enormous potential in AI technology’s future applications. Their previous experience includes running Milq, a media start-up they sold to Layer 6, the AI division of Canada’s TD Bank.

The firm has an impressive portfolio of AI companies. Notably, Radical was the first investor in Cohere, which has now reached a valuation of $5.5 billion. Other notable investments include Covariant, a firm specialising in robotics, and Genesis Therapeutics, which focuses on drug discovery.

Despite challenges within the broader start-up ecosystem, including high interest rates, regulatory scrutiny on acquisitions, and a stagnation in initial public offering (IPO) markets, the AI sector has continued to attract substantial funding. Data from PitchBook indicates that AI investments contributed to a 47 percent increase in US venture funding, totalling $55.6 billion in the three months leading up to June, marking the highest quarterly total in two years.

Reflecting on a crucial moment for the firm, Jacobs cited the 2017 publication of “Attention Is All You Need,” a groundbreaking AI research paper. Authored by a team that included Cohere co-founder and CEO Aidan Gomez, the paper significantly influenced Radical Ventures’ strategic direction. “We believed after that paper that [AI] would cause a replacement cycle of software that would have an economic impact akin to an industrial revolution, and that it would also unlock science, which would be like a second industrial revolution,” Jacobs explained.

The successful capital raise underscores Radical Ventures’ commitment to driving innovation within the AI sector, solidifying its role as a key investor in technologies that are expected to shape the future.