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Microsoft Corp. is investing in Montreal-based artificial intelligence start-up Element AI.Akos Stiller/Bloomberg

Microsoft Corp. is funding a Montreal startup co-founded by renowned artificial-intelligence expert Yoshua Bengio, another endorsement of the city's reputation as an emerging global centre for one of most anticipated technology trends.

The Redmond, Wash.based software giant, which is positioning itself to be a big player in AI, is announcing Monday the launch of a new venture fund to finance AI firms. Its first investment is in Montreal-based Element AI, co-founded by Dr. Bengio, a University of Montreal professor regarded as one of the pioneers of "deep learning," a field that uses algorithms to model and process information similar to how the brain works. Microsoft will also provide Element AI with access to its technology and services.

"AI holds great promise to augment human capabilities and improve society," Nagrap Kashyap, corporate vice president of Microsoft Ventures, said. "Element AI shares our approach and philosophy" of "democratizing AI."

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The Canadian firm was co-founded by Dr. Bengio, serial AI entrepreneurs Jean Francois Gagne and Nicolas Chapados, and venture capital firm Real Ventures.

Element AI is seeking to raise tens of millions of dollars in venture capital with plans to fund, incubate and spin off firms that can develop business solutions derived from data provided by public sources and corporate partners. It plans to hire 40 people by February, while drawing on the expertise of AI faculty at University of Montreal, McGill University and University of Toronto. "We'll see opportunities nobody else can see because of the unique relationship will build with a bunch of partners," said Mr. Gagne, Element AI's chief executive officer. He declined to disclose the size of Microsoft's investment.

The Microsoft news comes on the heels of a $4.5-million investment last month by Alphabet Inc.'s Google business in the Montreal Institute for Learning Algorithms, also headed by Dr. Bengio. Google is also starting a deep learning and AI research group in Montreal.

In addition, the federal government in September announced a $213-million grant to fund AI and big data projects by four Montreal post-secondary institutions. There are 150 deep-learning researchers at the University of Montreal and McGill alone.

Mr. Gagne said there are so many opportunities for AI professionals in Montreal that the city is attracting global talent that might have been hesitant to come two years ago. "This year, I can give [AI professionals] five options, and soon, much more. People now know … the ecosystem is here, it's growing, it's booming and they want to be part of it."

Tech giants including Google, Baidu and Uber have been on a hunt for AI talent, snapping up academics – including deep-learning pioneer and University of Toronto professor Geoffrey Hinton, who works for Google and former U of T colleague Ruslan Salakhutdinov, who became Apple's director of AI Research in October – and investing in research centres and AI startups globally.

They are betting that recent high profile AI breakthroughs – including victories by IBM and Google machines over humans in Jeopardy and Go, respectively – point the way to more sophisticated problem-solving feats and value-creation opportunities to come.

For example, Microsoft said in October that its speech recognition technology recognized words in conversations as well as humans and made "the same or fewer errors than professional transcriptionists."

At the same time, some observers have warned smart machines will displace millions of workers in the coming years. In response, some technology leaders including billionaire Elon Musk have suggested governments provide basic guaranteed universal income to citizens, a public-policy option with far-reaching implications that hasn't been fully explored.

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