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Radical Ventures, the venture capital firm that helped launch pioneering AI startup Cohere, has raised nearly $800 million to create the largest AI fund of its kind.
The Toronto-based venture capital firm’s third institutional fund will focus exclusively on growth-stage startups, according to people familiar with the plans. It raised $550 million last year to invest in early-stage companies and $350 million in 2019.
Radical’s investors include the family office of former Google boss Eric Schmidt, Stanford professor Fei-Fei Li, a computer scientist dubbed the “godmother of artificial intelligence,” and former Google Brain executive Geoffrey Hinton, as well as several Canadian pension funds, such as CPP Investments.
CPP Investments said in public filings this week that it has committed $75 million to the new fund, bringing its total commitments to Radical to $204 million.
The capital raise comes as some investors have begun to question the likely returns from the billions of dollars invested in AI startups since ChatGPT launched nearly two years ago.
“There’s definitely a hype cycle in some parts of venture and AI,” said Jordan Jacobs, co-founder and managing director of Radical Ventures. “But I think there’s going to continue to be a lot of money.”
He added: “There are some really giant companies that are moving from seed to growth and they feel we have the expertise and relationships to invest.”
Jacobs declined to comment on the latest fundraiser.
Radical launched in 2017, becoming one of the first companies to focus exclusively on AI investing.
Since then, the firm has backed a number of budding AI companies that have grown rapidly as the technology boomed. It was the first investor in AI startup Cohere, which has since grown to a $5.5 billion valuation. Other portfolio companies include Covariant, a robotics foundation model, and drug discovery company Genesis Therapeutics.
Over the past two years, venture capitalists have flocked to artificial intelligence companies, even as startup fundraising has been rocked by high interest rates, competitive scrutiny of acquisitions and a largely frozen market for initial public offerings.
AI investments drove a 47 percent increase in U.S. venture funding, which reached $55.6 billion in the three months through June, the highest quarterly total in two years, according to PitchBook.
Radical was launched by Jacobs and Tomi Poutanen, who studied machine learning with Hinton at the University of Toronto. They previously ran a media startup, Milq, which they sold in 2017 to Layer 6, the AI research lab at Canada’s TD Bank.
The duo originally founded Radical to back deep learning companies as angel investors. They sold their company to invest in the technology full-time aVsceker the publication of “Attention Is All You Need,” a seminal research paper on artificial intelligence authored by a group of Google scientists, including Cohere co-founder and CEO Aidan Gomez.
“AVsceker that document we believed that [AI] It would cause a soVscekware replacement cycle that would have an economic impact similar to an industrial revolution and that would also unlock science, which would be like a second industrial revolution,” Jacobs said.
“No Western investor has focused on this,” he added.
