September 16, 2019
On Friday, September 13th, Element AI Inc., (Element) an artificial intelligence (AI) start-up based in Montreal, announced its second significant financing round, securing C$200 million from a group of investors. The financing is one of the largest of the year for an early-stage technology company in Canada.
Co-founded in 2016 by deep-learning expert and Université de Montréal professor Yoshua Bengio, and a group of entrepreneurs led by CEO Jean-Francois Gagné, Element’s business model is to deliver AI software products at scale and democratize businesses’ access to technological solutions. Element’s aim is to help companies in sectors such as financial services, insurance, manufacturing, retail and logistics to improve their operations using AI tools.
The latest financing round is being led by the Caisse de dépôt et placement du Québec (Caisse), along with contributions from the consulting firm McKinsey & Company, and the Québec government.
Despite the sizeable influx of funds, the messaging surrounding the financing has been decidedly restrained. Though well-connected and well-funded, Element has struggled financially in recent years, generating meager revenues. Specifically, the company has faced challenges getting its products to market due to heavy operating costs, and has been accused by other Canadian AI companies of draining the AI market of talent without showing that the technology is commercially viable. Nevertheless, information regarding the recent financing suggests that the investments were based on a valuation of up to US$625 million. Element plans to use the new wave of financing to commercialize more of its products and continue working on research & development.
Element’s most recent financing bump occurs in the wake of several big investments in Canadian start-ups, particularly in Quebec. Since 2017, the Quebec Government has committed hundreds of millions of dollars to technology initiatives to boost Montreal’s reputation as a global AI capital. Likewise, this past March, Caisse launched a $250-million fund to invest in Quebec AI companies.
Author: Jordyn Benattar