INSUBCONTINENT EXCLUSIVE:
While tech giants like Google and Amazon build and invest in a multitude of artificial intelligence applications to grow their businesses, a
startup has raised a big round of funding to help those that are not technology businesses by nature also jump into the AI fray.Element AI,
the very well-funded, well-connected Canadian startup that has built an AI systems integrator of sorts to help other companies develop and
implement artificial intelligence solutions — an “Accenture” for machine learning, neural network-based solutions, computer vision
applications and so on — is today announcing a further 200 million Canadian dollars ($151.3 million) in funding, money that it plans to
use to commercialise more of its products, as well as to continue working on R-D, specifically working on new AI
solutions.“Operationalising AI is currently the industry’s toughest challenge, and few companies have been successful at taking
proofs-of-concept out of the lab, imbedding them strategically in their operations, and delivering actual business impact,” said Element
AI CEO Jean-François (JF) Gagné in a statement
“We are proud to be working with our new partners, who understand this challenge well, and to leverage each other’s expertise in taking
AI solutions to market.”The company did not disclose its valuation in the short statement announcing the funding, nor has it ever talked
about it publicly, but PitchBook notes that as of its previous funding round of $102 million back in 2017, it had a post-money valuation of
$300 million, a figure a source close to the company confirmed to me
From what I understand, the valuation now is between $600 million and $700 million, a mark of how Element AI has grown, which is especially
interesting, considering how quiet is has been.The funding is being led by Caisse de dépôt et placement du Québec (CDPQ), along with
participation from McKinsey - Company and its advanced analytics company QuantumBlack; and the Québec government
Previous investors DCVC (Data Collective), Hanwha Asset Management, BDC (Business Development Bank of Canada), Real Ventures and others also
participated, with the total raised to date now at C$340 million ($257 million)
Other strategic investors in the company have included Microsoft, Nvidia and Intel.Element AI was started under an interesting premise that
goes something like this: AI is the next major transformational shift — not just in computing, but in how businesses operate
But not every business is a technology business by DNA, and that creates a digital divide of sorts between the companies that can identify a
problem that can be fixed by AI and build/invest in the technology to do that and those that cannot.Element AI opened for business from the
start as a kind of “AI shop” for the latter kinds of enterprises, to help them identify areas where they could build AI solutions to
work better, and then build and implement those solutions
Today it offers products in insurance, financial services, manufacturing, logistics and retail — a list that is likely to get longer and
deeper with this latest funding.One catch about Element AI is that the company has not been very forthcoming about its customer list up to
now — those that have been named as partners include Bank of Canada and Gore Mutual, but there is a very notable absence of case studies
or reference customers on its site.However, from what we understand, this is more a by-product of the companies (both Element AI and its
customers) wishing to keep involvement quiet for competitive and other reasons; and in fact there are apparently a number of large
enterprises that are building and deploying long-term products working with the startup
We have also been told big investors in this latest round (specifically McKinsey) are bringing in customers of their own by way of this
deal, expanding that list
Total bookings are a “significant double digit million number” at the moment
“With this transaction, we are investing capital and expertise alongside partners who are ideally suited to transform Element AI into a
company with a commercial focus that anticipates and creates AI products to address clients’ needs,” said Charles Émond, EVP and head
of Québec Investments and Global Strategic Planning at la Caisse, in a statement
CDPQ launched an AI Fund this year and this is coming out of that fund to help export more of the AI tech and IP that has been incubated and
“Through this fund, la Caisse wants to actively contribute to build and strengthen Québec’s global presence in artificial
intelligence.”Management consultancies like McKinsey would be obvious competitors to Element AI, but in fact, they are turning out to be
customer pipelines, as traditional system integrators also often lack the deeper expertise needed in newer areas of computing
(And that’s even considering that McKinsey itself has been investing in building its own capabilities, for example through its acquisition
of the analytics firm QuantumBlack.“For McKinsey, this investment is all about helping our clients to further unlock the potential of AI
and Machine Learning to improve business performance,” said Patrick Lahaie, senior partner and Montreal managing partner for McKinsey -
“We look forward to collaborating closely with the talented team at Element AI in Canada and globally in our shared objective to turn
cutting-edge thinking and technology into AI assets which will transform a wide range of industries and sectors
This investment fits into McKinsey’s long-term AI strategy, including the 2015 acquisition of QuantumBlack, which has grown substantially
since then and will spearhead the collaboration with Element AI on behalf of our Firm.”
