One of the top global names in private capital has joined Toronto’s Radical Ventures as the financier of artificial intelligence startups gears up to raise its second fund.
John Megrue Jr. was previously co-chairman of Bridgewater Associates, one of the world’s largest hedge funds, and before that chairman and CEO of private-equity giant Apax Partners US. He also races Ferraris. Mr. Megrue has joined Radical as vice-chairman and partner after advising the firm for more than a year.
He was introduced to Radical by former McKinsey & Co. global managing partner Dominic Barton, an early adviser to the firm and now Canada’s ambassador to China.
Mr. Megrue is not an AI expert but said in an interview he can be helpful to Radical in the areas of talent management and strategy. “Radical has clearly positioned itself at the forefront … as the leading AI venture firm. They’re in a unique position being in Toronto,” an emerging AI capital.
Radical managing partner Jordan Jacobs said Mr. Megrue brings experience but also cachet. “At big funds, when we’re partnering on deals, and they hear John is involved … for sure it’s a stamp of approval that someone who’s had this incredible career has chosen to spend a big chunk of his time with a relatively new fund,” Mr. Jacobs said. “That’s not why we did it – we did it for the value we get internally. But it certainly helps.”
Mr. Megrue is the latest big name to join Radical, which counts former Toronto-Dominion Bank chairman and chief executive officer Ed Clark and Salim Teja, a past senior executive with MaRS Discovery District, as partners. The firm this year added Rob Toews as a partner in San Francisco after he previously led AI investments for Highland Capital Partners and helped craft AI policy for the Obama administration. Other team members previously worked at Google and private-equity firms Onex Corp., TPG Capital and KKR & Co.
Mr. Megrue also becomes the latest in a string of global tech industry heavyweights to attach themselves to emerging players in Toronto’s AI sector. This fall, Moderna’s former chief medical officer Tal Zaks became a strategic adviser to AI-powered drug discovery company Deep Genomics, while chatbot provider Ada Support Inc. recruited Twilio Inc. vice-president of engineering Jessica Popp to become chief technology officer. Last year, Jim Keller, who previously held senior roles at Intel and Tesla joined Toronto-based AI chip maker Tenstorrent as chief technology officer.
“When I started doing my homework, Canada popped up pretty high as the third-fastest growing place for jobs in AI worldwide and the first country to establish a national framework for AI,” and one of the leading destinations for private investment in AI, said Mr. Zaks, an Israeli. “I’m impressed by what Canada has done.”
Mr. Jacobs and his Radical co-founder Tomi Poutanen have been pivotal players in establishing Toronto as a home for AI enterprises and talent after foreign technology giants swooped into Canada a decade ago, buying startups and hiring some of the top local researchers.
As concerns mounted about a brain drain in an emerging field where Canada had an early lead, Mr. Jacobs, Mr. Poutanen, Mr. Clark and others pushed Ottawa to help keep and expand AI talent in Canada. In response, the federal government in 2017 introduced a $125-million AI strategy, which funded Toronto’s Vector Institute for Artificial Intelligence and similar centres in Edmonton and Montreal.
Mr. Jacobs and Mr. Poutanen also had success of their own; the former entertainment lawyer and machine-learning expert, respectively, sold their AI startup Layer 6 to TD for US$100-million-plus in 2018. They then launched Radical in 2019 and raised one of the biggest debut funds by a Canadian venture capital firm, securing US$325.5-million from backers including TD, Canada Pension Plan Investment Board, PSP Investments and the Weston family.
Their first fund has backed 17 companies and will invest in another five to seven, Mr. Jacobs said; portfolio companies include autonomous driving startup Waabi Innovation Inc., led by renowned University of Toronto computer scientist Raquel Urtasun, the former chief scientist with Uber’s self-driving car unit; quantum computing developer Xanadu Quantum Technologies Inc.; and AI chip developer Untether AI Corp.
Mr. Jacobs said the new fund, which will focus primarily on North American investments, will start raising in the coming months, “though we don’t have a defined amount yet. But it will be substantially larger.”
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