Radical Ventures, a prominent Canadian venture capital firm recognized for its early investments in leading artificial intelligence startups, is reportedly on the verge of finalizing commitments totaling nearly $800 million for a new fund, as per sources familiar with the matter. This fundraising initiative is approaching its conclusive phases, poised to elevate the firm's assets under management to approximately $1.8 billion.
This new fund becomes Radical Ventures’ first venture that targets later-stage companies. This is a significant shift in focus for the firm, which has traditionally invested in early-stage AI startups over the past seven years. The firm's investment strategy involved providing smaller seed-stage investments initially and scaling up as the companies matured. Some notable companies in Radical Ventures' portfolio include Cohere Inc., Covariant Inc., Untether AI (an AI chip development startup), and Genesis Therapeutics Inc. (a drug discovery company).
Radical Ventures' new fund will enable them to make larger investments in well-established companies. Jordan Jacobs, co-founder and managing partner of Radical Ventures, mentioned that the funds will allow them to lead deals in later stages. Jacobs did not provide specific details about the fundraising process or the size of the new fund, however, public filings suggest that the firm initiated the fundraising earlier this summer.
Radical Ventures has attracted notable investors, including Fei-Fei Li, a pioneering AI researcher who currently serves as a scientific partner at the firm. Another prominent figure is Geoffrey Hinton, considered the ‘godfather’ of AI. In addition to Li and Hinton, investors include TD Bank, Temasek, Canadian pension investors CPP Investments, and PSP Investments. CPP Investments has recently pledged $75 million to Radical's new growth fund, bringing its total commitment to the firm to $204 million.
The recent achievement in fundraising is particularly remarkable considering the challenging climate in the venture capital industry, marked by increasing interest rates, acquisition limitations, and a slowdown in IPO activity that has dampened enthusiasm. Despite these obstacles, Radical Ventures, an organization with approximately 30 employees worldwide, has distinguished itself. Co-founded by Jordan Jacobs and Tomi Poutanen, both of whom pursued machine learning studies under Hinton at University of Toronto, the firm has a noteworthy background. The duo previously initiated a deep learning media startup named Milq and played pivotal co-founding roles in establishing the Vector Institute in Canada. In 2017, upon reading the groundbreaking research paper ‘Attention Is All You Need’ by Google AI researchers, they opted to sell their other startup, Layer 6, to concentrate on full-time investment activities, leading to the creation of Radical Ventures.
Jacobs expresses optimism regarding Radical Ventures' future and downplays concerns about AI being overhyped. He highlights the company's strategic stance of leading AI trends instead of merely following them, demonstrating his belief in the technology's significant long-term transformative capabilities across various industries. Despite fluctuations in the short-term market, Jacobs conveys that Radical Ventures maintains its focus on avoiding hype and inflated valuations by prioritizing setting trends in AI over being influenced by daily market fluctuations.