Radical’s new Canadian-based VC fund secures $1-billion for AI megadeals

Jordan Jacobs had trouble sleeping after reading a new study from Google in September, 2017, titled, “Attention is All You Need.” It introduced a concept that would radically speed up and improve the accuracy of artificial intelligence models designed for writing and interpreting language.

Mr. Jacobs, an entertainment lawyer-turned AI startup founder, immediately grasped its significance. The findings would transform AI and language models from a promising but limited technology into something vastly bigger. “Every piece of software on earth will get replaced or embedded with this over the next decade,” he recalled thinking at the time.

So, Mr. Jacobs and co-founder Tomi Poutanen sold their startup, Layer 6, to Toronto Dominion Bank and leaned hard into their side hustle: investing in other AI startups. They believed they could build the world’s best AI investment firm to capitalize on the coming wave.

That bet is paying off. Their company, Radical Ventures is now one of Canada’s biggest venture capital firms, with US$2.5-billion in assets under management.

Now, Radical is making Canadian financing history with the launch Tuesday of its Breakouts Fund, the country’s largest venture capital vehicle.

Radical said it has secured US$1-billion from investors for the new fund, including past backers Public Sector Pension Investment Board, Canada Pension Plan Investment Board, Healthcare of Ontario Pension Plan, TD, CI Global Asset Management and OPSEU Pension Trust, plus the Bank of Montreal.

Prime Minister Mark Carney was expected to highlight the fund in the opening remarks of his global investor summit Tuesday.

The amount raised so far is a Canadian venture capital record. But the goal for the Breakouts Fund is far more ambitious – US$4-billion, two sources familiar with the matter said (Mr. Jacobs would only say the target is a “multi-billion dollar” amount). The Globe and Mail is not identifying the sources as they aren’t authorized to discuss the matter.

Radical plans to initially invest up to US$250-million apiece in 12 scaleup companies it believes can become trillion dollar-valued businesses, writing much larger cheques than its six previous funds could. The goal “is to invest in the best companies, period” anywhere in the western world, Mr. Jacobs said. “There are definitely Canadian companies that qualify.”

Daniel Debow, a Toronto entrepreneur and angel investor who introduced Radical’s co-founders to one another, described Mr. Jacobs as a “quiet doer who doesn’t care about being the best VC in Canada. He wants to be the best in the world.” Unlike many other Canadian VCs, Radical hasn’t taken investment through a federal incentive program, he added.

It has backed some of the country’s most promising AI companies including Waabi Innovation Inc., Aspect Biosystems Ltd. and Cohere Inc., whose CEO, Aidan Gomez, co-authored the 2017 paper. Radical has been among the first investors in startups founded by leading AI researchers including Jeff Dean, Fei-Fei Li and Sanja Fidler.

Radical is one of a small but growing number of Canadian financiers of “growth capital,” or money earmarked for fast-growing companies that have matured past startup size – through an US$800-milion fund it launched in 2024 (its other funds, including a US$660-million vehicle launched in 2025, have targeted earlier-stage companies).

But while growth funds typically deploy tens of millions of dollars per deal, Radical’s Breakouts Fund is something new for the Canadian venture system – a super-sized growth capital provider. It aims to address the reality that top-tier tech companies are not only remaining private for longer, but have achieved valuations in the 10s or even 100s of billions of dollars while doing so. That’s particularly true of AI companies that have grown rapidly since OpenAI released ChatGPT four years ago, bringing the promise of the 2017 paper to fruition.

These financings are running into the billions of dollars, including a recent €3-billion financing by France’s Mistral AI. Cohere is in advanced talks to raise up to US$3-billion, The Globe reported last week.

To take a key role in rounds this size is beyond the capacity of Canadian financiers other than a few pension funds. Mr. Jacobs said Radical wanted to launch a fund big enough to enable meaningful participation in these megarounds.

Radical’s founders are more than venture capitalists; they are at the heart of a 15-year effort to champion and protect Toronto’s status as a leading AI hub. They worked through the mid-2010s to ensure the city wasn’t emptied of AI talent and startups when foreign tech giants steamrolled into the space, leading efforts to establish Toronto’s Vector Institute for Artificial Intelligence and helping to write the federal government’s first AI strategy.

Mr. Jacobs entered Osgoode Hall Law School at 19 and worked as a securities lawyer before starting an entertainment and technology practice. In the late 2000s, he executive-produced a TV interview show hosted by rock star Elvis Costello. He loved working with creative people, which inspired his approach to backing AI researchers, who he said “are creative people coming up with ideas, just like writing a song, a script or a book.”

In 2010, Mr. Jacobs started his own technology company, Milq, to build a personalized online content discovery platform using machine learning. He teamed up with Mr. Poutanen, who had studied computer engineering under future Nobel laureate Geoff Hinton, and had just returned to Canada from Silicon Valley after selling his startup to Yahoo.

Milq signed up customers including the New York Times and National Basketball Association, but after social media sites began adding native video applications, Mr. Jacobs and Mr. Poutanen pivoted to selling AI solutions to banks, renaming their company Layer 6. They won a global computing challenge by building new recommendation system tools and were getting takeover offers when they read the Google paper. “Both of our minds were buzzing,” said Mr. Poutanen.

Within months, they sold Layer 6; TD let the pair build Radical on the side. Mr. Jacobs impressed giant funders with their bold vision, and left TD in May, 2019, to lead Radical full-time with commitments from TD, PSP, CPPIB and others to anchor a US$325-million fund; few Canadian VCs raise even half that amount for their early funds. (Mr. Poutanen left as TD’s chief AI officer in 2022 to build another AI startup, Signal1 AI Inc.; he remains a Radical partner.)

Big names joined as Radical partners, including retired TD CEO Ed Clark, ex-McKinsey & Co global managing partner Dominic Barton and U.S. hedge fund titan John Megrue Jr.

AI remains an uncertain space, marked by fears of of a bubble and concerns the technology could pose a threat to humanity. But Radical’s founders remain all in.

“We had a strong desire to build an economy around the talent and breakthroughs coming out of Canadian universities,” said Mr. Poutanen. “It’s quite remarkable that this under-the-radar fund from Canada could compete neck-in-neck with Sand Hill Road venture capitalists” from Silicon Valley.

With a report from Joe Castaldo