The chief of business and strategy for artificial intelligence at Toronto-Dominion Bank is leaving just 16 months after selling his startup to the financial services giant for US$100-million-plus to launch an AI-focused venture capital fund backed by some of Canada’s largest institutions – including his recent employer.
Jordan Jacobs stepped down last week to devote himself full time to Radical Ventures, a two-year-old investment firm he had co-managed on the side with less than US$10-million in investor funds. Mr. Jacobs had always planned to leave once TD had fully integrated the acquisition of his startup, Layer 6.
His plan is for Radical to become a significant source of domestic capital and expertise to the country’s teeming artificial intelligence sector so startups here have more options than selling out to foreign tech giants. “Our goal ... is to build giant companies here,” he said in an interview.
The planned size of the fund – US$350-million – is unusually large for such a young Canadian venture capital firm, and would rank as one of the largest Canadian-based VC funds this century. The names of Radical’s initial backers are also notable. Other than TD, they have done relatively little investing in the Canadian tech sector but have committed more than half of the fund’s goal. Those include anchor investor Canada Pension Plan Investment Board (CPPIB), Montreal-based pension fund PSP Investments and the billionaire Weston family.
Former TD chairman and chief executive officer Ed Clark has joined Radical as a partner to advise startups it finances while former McKinsey & Co. global managing partner Dominic Barton will be an adviser.
Salim Teja, formerly a senior executive with MaRS Discovery District, will lead Radical’s “impact team” to work closely with companies financed by Radical. Also leaving TD is Radical co-founder and general partner Benji Sucher, who was Layer 6’s chief operating officer.
Radical will aim to invest between US$5-million and US$12-million for each deal in companies delivering AI-based products across a range of industries such as health care and finance that are already generating millions of dollars in annual sales, Mr. Jacobs said. He said the firm expects to invest primarily in Canada.
CPPIB, Canada’s largest institutional investor, was one of many deep-pocketed financiers that retreated from Canada’s underperforming venture capital scene a decade ago. Despite a subsequent renaissance in the country’s tech scene – and the success of a new class of entrepreneur-led Canadian VC funds – CPPIB largely remained on the sidelines while others, notably the Ontario Municipal Employees Retirement System (OMERS) and the Caisse de dépôt et placement du Québec, backed some of Canada’s top emerging tech names.
CPPIB signalled a change was coming when online tech journal The Logic reported in December that the pension fund would devote up to $1-billion to back venture capital funds globally, including in Canada. Mr. Clark said CPPIB’s backing “is a huge endorsement … obviously it adds credibility to other people coming in.”
Mr. Jacobs said “I think it is very important that we unlocked some of these huge [Canadian] pension funds who previously were not investing in venture capital as an asset class. … For us it was really important to see if we could get [CPPIB] as an initial investor” given its size global heft and influence on other investors, so there would be more domestic sources of funding for young Canadian AI firms.
It’s the latest coup for Mr. Jacobs, a former entertainment lawyer who co-founded a music playlist app maker called Milq Inc. with entrepreneur and machine learning expert Tomi Poutanen in 2011. They started Layer 6 as an AI-focused offshoot of Milq in 2016 with fellow employee Maksims Volkovs, who, like Mr. Poutanen, studied under famed University of Toronto deep learning pioneer Geoff Hinton. Around the same time, they met Mr. Clark, who quickly signed on to support their ambition to found an AI institute in Toronto that would help keep the city’s highly sought-after machine learning experts from leaving town to work for Silicon Valley giants. With Mr. Clark’s support, the group gained commitments from Ottawa, the province and industry to found the Vector Institute in 2017.
Layer 6 spent that year working on early projects for customers including TD. With AI startups commanding big offers from tech giants, it sold to TD, marking one of the few sizable purchases by a large Canadian-based corporation of a domestic AI firm.
TD chief digital officer Rizwan Khalfan said the bank knew early on Mr. Jacobs “would move on to do better things,” once the acquisition was fully integrated. Mr. Poutanen and Mr. Volkovs have stayed on at TD.
Mr. Khalfan added the bank “wanted to be part of a fund like [Radical]” that promotes Canada’s talent and technology capabilities.
“Jordan has been at the centre of building on Canada’s leadership role in AI,” said David Ossip, the Toronto-based CEO of payroll software giant Ceridian HCM Holding Inc. “We have all the ingredients to make Canada a global industrial hub of AI, with one glaring exception: We still lack enough domestic, smart venture capital. Radical Ventures should help solve that.”