(Bloomberg) -- Radical Ventures, a Canadian venture capital firm that made early bets on a string of hot artificial intelligence startups, has secured nearly US$800 million in commitments for a new fund, according to people familiar with the plans.
The firm is currently nearing the close of the new fund, which will boost its assets under management to about $1.8 billion, said the people, who asked not to be identified discussing private information.
The new fund will be Radical Ventures’ first to focus on later-stage companies. In the seven years since its founding, the firm has mostly backed very early AI startups, investing small checks at the seed stage. Its portfolio companies include Cohere Inc. and Covariant Inc., both of which have grown to become significant players, along with AI chip development startup Untether AI and drug discovery company Genesis Therapeutics Inc.
The new fund will allow Radical Ventures to write larger checks for bigger companies. “With this, we can lead deals,” said Radical Ventures co-founder and managing partner Jordan Jacobs. Jacobs declined to provide details on the fundraising process or size of the new fund, which public filings show the firm began raising earlier this summer.
Investors in Radical Ventures have included pioneering AI researcher Fei-Fei Li, who is now a scientific partner at the firm. Other backers are AI “godfather” Geoffrey Hinton, TD Bank, Temasek and Canadian pension investors CPP Investments and PSP Investments, one of the people said. The firm declined to comment on the investors in its latest fund.
It’s been a rocky few years in the VC industry. Rising interest rates, restrictions on acquisitions and a dearth of IPOs have recently dampened enthusiasm for the asset class. Venture funding in the US last year was the slowest since 2017, according to data provider PitchBook, and this year is on track to be even slower.
That makes the fresh fundraising for Radical Ventures, which employs fewer than two dozen people, more notable. Jacobs started the firm with Tomi Poutanen, who studied machine learning with Hinton at the University of Toronto. Together they launched a media startup called Milq and co-founded the Vector Institute in Canada. After reading the seminal “Attention Is All You Need” paper by Google AI researchers in 2017, the duo decided to sell their other startup, Layer 6, to focus on investing full-time. Initially, Radical Ventures was a way to organize their angel investing projects.
“It was this huge white space,” Jacobs said. Today, the sector is more crowded, but Jacobs still sees big potential, and is bullish on the firm’s ability to select winning startups. Radical has met with about 8,500 AI companies and invested in fewer than 50 over the past five years. “Our approach is to be there before other people,” he said.
Jacobs also downplayed recent concerns that AI is overhyped, and dismissed critics’ fears that a boom in the industry may be fading. Despite the short-term uncertainty, the firm is betting that the technology will transform biotech and other major industries in the long run. “The vicissitudes of the market day to day don’t matter to us,” he said.
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