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Founded in 2016 by a team of six partners including serial entrepreneurs and winner , Element AI is described by lead investor as “a company with a commercial focus that anticipates and creates AI products to address clients’ needs.”

In its own words, Element AI “turns research and industry expertise into software solutions that exponentially learn and improve” and are adapted to specific industries with a primary focus on the financial services and supply chain sectors. Its offering, which includes advisory services, AI-enablement tools and products, aims to help large organizations “operationalize AI and create real business impact.” Customers include LG and National Bank, among others.

The round is notable for several reasons. For one, it marks the second mega venture financing raised by a Canadian startup this month. On Sept. 4, we reported on Canada-based legal tech startup raising a massive $250 million Series D round from and . It’s also a really large Series B, another example of how companies are raising more and more at the so-called “early-stage,” a trend we’ve been following.

Besides CDPQ, new investors in Element AI’s latest round include and . The round also included participation from returning Series A investors, including , , BDC Capital, and others. The new financing brings the company’s raised so far to roughly $258 million. DCVC led Element AI’s in June 2017.

In a, Element AI CEO Gagné said his company has been able to “operationalize” AI.

“Few companies have been successful at taking proofs-of-concepts out of the lab, imbedding them strategically in their operations, and delivering actual business impact,” he said.

In its press release, Element AI said the company will use the new capital “to fuel global product and services development” while “accelerating the commercialization of AI.” Element AI declined to provide any growth metrics when I asked, but told me that it currently has just under 500 employees across its Montreal headquarters and offices in Toronto; London, Seoul, South Korea, and Singapore.

In general, the AI scene in Canada seems to be heating up. CDPQ invested in the company as part of its recently-formed “CDPQ-AI Fund” aimed at helping speed up the commercialization of AI solutions in Quebec.

The news also comes nine months after McKinsey’s advanced analytics and AI arm, , launched its first Canadian office in Montreal. The consulting firm acquired QuantumBlack in 2015 and said the company will “spearhead the collaboration” with Element AI on behalf of its firm.

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Hence, Canada-based (which provides that type of software) announced this morning it has raised a massive $250 million Series D round from and . Clio’s platform aims to serve as “an operating system” for lawyers, offering cloud-based . The company has 150,000 customers across 100 countries.

The financing is roughly ten times the amount of venture funding that Clio had previously raised since it was founded in 2008. The company’s amounted to a comparatively small $6 million. In 2014, Clio led by that valued the company at $110 million, according to Crunchbase data. The company raised a $1 million Series A in 2019 from friends and family and , who was also an early investor in and contacted Clio via a cold email after finding the company on the internet, according to Clio CEO and co-founder .

The new round is “one of the largest in legal technology and the largest in Canadian history,” according to Clio.

Newton said his vertical SaaS company helps legal professionals be more productive, grow their firms and “make legal services more accessible.” It also aims to help clients find lawyers more easily and vice versa.

In its first 10 years of operation, Clio has focused on building out its core technology to an industry that continues to rely on pen and paper in many cases. It has also aimed to make legal technology more affordable for lawyers to use.

Following the news, I spoke with TCV Principal this morning. Helekar will join the company’s board along with TCV General Partner . He said his firm views Clio as the clear market leader in the legal tech space, which Helekar believes is “underused relative to the potential demand in the end consumer base.”

“This is a vast industry that has been lagging in technology adoption and there’s tons of opportunity,” he said. “We see Clio as a pioneer in cloud-based tech solutions for the legal industry that has seen exceptional organic growth.”

Helekar likened Clio’s trajectory to that of previous TCV investments such as , and .

“We feel like this investment can help supercharge the business so the company can double down and expand its advantage and capture share in a market that hasn’t yet adopted technology in a big way,” he told me. “They’ve been very capital efficient but this kind of capital can help them invest in go-to-market, build out their sales team and invest in a lot of product in addition to the suite they currently have.”

Last year, Clio made its first acquisition with its buy of, a Los Angeles-based legal tech startup. The company plans to do more acquisitions with the capital, according to Newton. It also wants to accelerate product development in general and continue integrating with more apps. Since the company made the decision five years ago to expand its functionality through integration (it currently has partnered with over 150 apps), the company has seen accelerated growth, Newton said.

Speaking of growth, Newton would not provide any revenue numbers but said the company was scaling “rapidly” and had “roughly doubled its number of employees” to over 400 in the last two years. He also declined to comment on valuation.

The company also announced today that , who founded legal marketplace (which was by), is joining Clio as an independent board member.

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So it’s teaming up with , a tech incubator out of in Toronto, to help foster entrepreneurship among Black founders in Canada through a new program that has been dubbed the “Black Innovation Fellowship.”

“We’re committed to changing the face of entrepreneurship because we believe in a future with more voices not fewer,” said Shavonne Hasfal-Mcintosh, diversity and belonging lead at Ontario-based Shopify. “DMZ’s fellowship program will improve access for Black entrepreneurs by providing a new path to success, which is another important way we’re helping independent business owners in Canada turn their big ideas into businesses.”

Shopify and inaugural founding partner , which was founded by Nigerian-born entrepreneur turned venture capitalist , are contributing capital to the program, which has a total initial fundraising goal of $1 million.

As part of the initiative, selected founders will have access to “growth mentors, exclusive workshops designed to reflect the experience of Black entrepreneurs and a dedicated workspace in the heart of downtown Toronto.” The participants will also have access to a 350-person network of investors, according to , executive director of DMZ, a business incubator that has worked with 398 startups that have raised nearly $594 million in seed funding since its inception in 2010.

Entrepreneurs addressing “a compelling market or societal need” are being encouraged to apply to the program.

“We realize that in North America, diverse communities still continue to face barriers to access that other communities don’t necessarily face,” Snobar said. “This concept was born to support black entrepreneurs, and help them build, grow and scale companies. It was also designed to help them build meaningful partnerships and not be impacted because of skin color, background, or where they were raised.”

Founders will not be asked to give up equity, Snobar emphasized.

“We want to make it as accessible as possible so it’s completely nondilutive,” he said. “Only 10 percent of our community is made up of people who identify as black founders. We want to see that number double or triple.”

Eventually, the program could extend to the United States, according to DMZ.

In February 2019, we wrote this article on minority founders being overlooked. But fortunately, we’ve also covered other initiatives focused on helping Black or underrepresented entrepreneurs. In 2017, we wrote about the efforts of Austin-based , a nonprofit pre-accelerator that is holding 12-week programs for women and people of color tech founders. Also, earlier this month, we reported on how – a nonprofit fellowship program providing Black and Latinx students with training and mentorship in venture capital – has teamed up with Intel Capital to strengthen its curriculum and scale its programming. The organization also recently unveiled its inaugural “31 Under 31” list.

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Fast forward to 2017, and the country’s startup scene is booming with significant amounts of US venture capital dollars flowing into Canada.

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According to Crunchbase data, there were 60 percent more funding deals and 150 percent more venture capital dollars pumped into Canadian companies in 2016 compared to 2012.  More specifically, companies in the region raised $2.7 billion (CA$3.3 billion) in 2016 across 427 deals compared to US $1.1 billion (CA$1.4 billion) across 267 deals in 2012.

This is in line with findings by the Toronto-based (CVCA), which shows that VC funding climbed 68 percent from $1.5 billion (CA$1.9 billion)in 2014 to $2.6 billion (CA$3.2 billion) in 2016 – an all-time high for the country.

Much of that money came from south of the border. More than half of VC investment in Canada in 2016 originated from U.S. firms, according to , CEO of the CVCA. U.S. money accounted for about 60 percent of the money in 40 percent of the deals, Woollatt said.

In 2016, 10 Canadian startups each raised more than US $40.5 million (CA$50 million), compared to 2015, when five companies raised more than $40.5 million (CA$50 million), according to the CVCA.

In June 2017, Montreal, Quebec-based  – a platform for companies to build AI solutions ­– raised US $102 million (CA$125.6 million) in a a mere eight months after it launched. Notably, San Francisco-based led the round along with a slew of other investors. And let’s not forget that Menlo Park-based Bessemer Venture Partners invested in Shopify’s Series A, B and C rounds – deals that likely yielded high returns for the firm.

“In Canadian terms, that was enormous. Overall, from 2000 to 2010, it was hard to raise money in Canada,” Woolatt told Crunchbase News. “But in the last few years, things seem to have exploded.”

As evidence of that, more U.S.-based institutions are establishing a presence in the region. For example, Silicon Valley Bank earlier this year was reportedly to open a lending branch in Toronto. And more U.S. venture capital firms are looking at Canadian companies.

, general partner of Palo Alto-based , said his firm recently invested in its first Canadian startup,  Spun out of the University of British Columbia, the four-year-old biotech company focuses on the 3D printing of human tissue. As a whole, Fahim said Canada is appealing from an investment perspective.

“The availability of top-notch technical talent combined with far lower burn rates enables founders to achieve big audacious goals,” Fahim said. “And this is the essence of building something that matters.”

So what has changed in Canada aside from Shopify’s successful IPO?

Politics Matter

Prime Minister Justin Trudeau’s election in 2015 also has proven to be nothing but good for tech companies. The Liberal government , and made decisions such as fast-tracking visas for tech workers.  In May 2017, Prime Minister Trudeau a gathering of CEOs at the Microsoft CEO Summit in Redmond, Washington in an effort “to encourage innovation, promote investment in the technology sector, and draw global talent to Canada.”

One of the movements driving investment in Canada in recent years has been the Canadian government’s (VCAP), which was established to encourage private sector investment into early-stage companies.

The offers incentives to private investors who create venture capital funds to support smaller businesses. For every $2 committed by the private sector, the government commits an additional $1, up to a maximum of $100 million per fund, according to the Business Development Bank of Canada.

Between 2013 and 2016, the $400-million backed four successful private sector-led funds, which led to nearly $900 million in private investor funds being added to the ecosystem.

A change to Canadian tax laws in 2010 also for more foreign investors. The removal of a withholding tax essentially meant “that the red tape of section 116 of the Income Tax Act no longer applies when foreign investors dispose of their interests in tech ventures,” according to the Financial Post.

On top of that, let’s not forget the obvious: a favorable exchange rate makes Canada more attractive for U.S. investors, and cultural barriers are less of an issue.

“It also helps that we speak the same language, are in the same time zones and have roughly same culture,” the CVCA’s Woollatt said. “Plus, Canada is relatively cheap from a labor standpoint and we have one of the most highly educated populations in the world with a huge number of engineers per capita.”

Next week, we’ll break down the geography of Canada by venture capital activity and talk to a local VC firm and startup founder to get a firsthand perspective of the country’s growing tech ecosystem.

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