A Toronto-based artificial-intelligence software startup with just 38 employees and a handful of customers has surpassed US$100-million valuation after receiving a capital injection led by Montreal financial-services giant Power Financial Corp.
Integrate.ai Inc. has raised US$30-million in a funding round led by Power’s Portag3 Ventures and backed by previous backers Georgian Partners and Real Ventures, two of Canada’s most active investors in the AI space.
Now, 20-month-old Integrate, founded by former Facebook executive and Toronto native Steve Irvine, plans to hire 100 people in the next year, expand its customer base to dozens of large consumer-facing Canadian corporate giants – and ready its expansion into the United States in 2020.
“There is a big premium for extremely high growth potential in a large market,” said Justin LaFayette, managing partner with Georgian, which provided Integrate’s initial $5-million seed funding in early 2017. “There’s certainly a massive market for what they’re doing.”
It’s the latest in a slew of large venture financings this year for Canadian startups applying AI software to help corporations improve their business results. Last week, Kira Inc., a Toronto AI software firm that helps lawyers cut much of the drudgery from contract review, raised US$50-million from New York’s Insight Venture Partners. Quebec City-based Coveo Solutions Inc. sold a 27-per-cent stake in the firm, which provides AI-powered search-engine tools to corporations, to U.S. investment giant Elliott Management Corp. for $100-million last spring, while Intel Capital led a $37-million investment in Toronto’s Rubikloud Technologies Inc. in January.
They are all players in a market for “cognitive and AI systems” that market-research firm IDC expects to mushroom in size to US$58-billion in revenue by 2021, up from US$8-billion in 2016.
Mr. Irvine set out in early 2017 to bring some of the AI-powered capabilities used by internet giants such as his former employer to the rest of the corporate world. His idea was to develop cloud-based subscription software that giant corporations would use to help more effectively target new customers, drawing insights gleaned from several large data sets that only machine learning algorithms could unearth.
Amid all the hype around AI, he took a pragmatic approach by looking to use AI tools to provide modest sales increases to giant consumer-facing businesses. Even delivering a 1-per-cent revenue increase “is a humongous number” that could represent hundreds of millions of additional revenues for Fortune 500-sized companies, Integrate chief operating officer Jason Silver said.
At the same time, Integrate wanted to assure wary corporations they wouldn’t compromise the security or privacy of their customers by using AI tools. Integrate developed what it calls a “trusted signals exchange,” a software platform that draws from several data sources to unearth correlations between various consumer-data patterns without exposing any personally identifying information. That early effort will put Integrate “into a trusted position,” Mr. LaFayette said. “I think the marketplace will rally behind the first mover that gets it right.”
Mr. Irvine quickly raised US$10-million from Georgian and Real, recruited a high-profile founding team and signed five corporate “alpha” customers to put its approach into practice: Bank of Nova Scotia, broadcaster Corus Entertainment, insurance-quote provider Kanetix Ltd. and two other unidentified companies
Its first customers had quick success: Integrate helped Scotiabank determine which potential customers for its Chilean credit-card business were likeliest to respond to e-mail promotions, resulting in 40-per-cent better results than targeted. It helped Corus Entertainment more effectively cross-promote shows across its specialty channels and helped Kanetix boost the number of quote-seeking web visitors to buyers by identifying which were most likely to respond favourably to incentive promotions. All five have signed on as continuing customers. "Our experience working with integrate.ai … has been a game-changer for Corus,” Corus president and CEO Doug Murphy said.
For Power, which has invested more than $250-million in early-stage tech companies in recent years, the investment is its biggest bet yet in the AI space. “I think the path to commercialization of Integrate’s solution is far more clear than a lot of other companies” in the AI space, said Portage3 executive chairman Paul Desmarais III, who is joining Integrate’s board.