Radical Ventures, a Toronto-based venture capital firm specializing in artificial intelligence, has secured nearly $800 million for a new fund focused on later-stage AI companies. This move marks a shift from the firm's previous strategy of backing early-stage startups with smaller investments.
The new fund will boost Radical Ventures' assets under management to approximately $1.8 billion, allowing the firm to lead larger investment rounds in more established AI companies. This expansion comes at a time when some investors are questioning the potential returns from the recent surge of investments in AI startups.
Jordan Jacobs, co-founder and managing partner of Radical Ventures, sees continued opportunity in the AI sector despite market skepticism. "There are some truly giant future companies that are now transitioning from early stage to growth," Jacobs told Bloomberg in an interview.
Radical Ventures has a track record of identifying promising AI startups early. The firm was an early backer of Cohere, an AI company recently valued at $5.5 billion. Other notable investments include robotics company Covariant and drug discovery firm Genesis Therapeutics.
Founded in 2017 by Jacobs and Tomi Poutanen, Radical Ventures has been highly selective in its investments. Over the past five years, the firm has evaluated approximately 8,500 AI companies but invested in fewer than 50.
The new fund has attracted high-profile investors, including Canadian pension funds CPP Investments, TD Bank, and PSP Investments. Notable individual backers include AI researchers Fei-Fei Li and Geoffrey Hinton.
The timing of this new fund is notable. While venture capital as a whole has faced headwinds due to rising interest rates and a tepid IPO market, AI has been a significant exception. According to PitchBook, AI investments in the U.S. rose 47% in the second quarter of this year, driving total venture funding to $55.6 billion, the highest in two years.
Jacobs remains bullish on AI’s long-term potential, despite the short-term skepticism surrounding the sector. He believes AI will continue to drive massive technological and industrial shifts, particularly in biotech and other major industries. Radical Ventures’ new fund will ensure the firm remains at the forefront of this AI wave, focusing on the companies that will define the next generation of technological progress.