Radical Ventures raises over $1bn for late-stage AI, Canada's largest venture fund

Radical Ventures, the Toronto firm best known as the first institutional backer of Cohere, said on Tuesday, September 15, that it had held a first close of more than $1bn for a new late-stage vehicle, the Radical Breakouts Fund. BetaKit put the figure at "well over" $1bn, or about C$1.4bn, which makes it the largest venture capital fund ever raised in Canada. The firm describes the vehicle as a multi-billion dollar fund; the Prime Minister's Office put its target at $4bn, while Radical itself says only that it is seeking "multi-billions".

The timing was not accidental. The fund was unveiled at the opening of the inaugural Canada Investment Summit in Toronto, a two-day event convened by Prime Minister Mark Carney and organised by the government together with CPP Investments and PSP Investments. Both of those institutions are among the fund's limited partners. The announcement is therefore as much a statement of national industrial policy as a fundraising milestone, and it deserves to be read on both levels.

Who is writing the cheques

The investor list reads like a roll call of Canadian institutional money. Alongside CPP Investments and PSP Investments, the backers include the Healthcare of Ontario Pension Plan, OPTrust, TD Bank Group, BMO Financial Group and CI Global Asset Management, plus unnamed foreign investors. Several of these relationships are old ones. Radical was founded in May 2019 by Jordan Jacobs and Tomi Poutanen, who had earlier sold their AI startup, Layer 6, to TD, and the firm's first institutional fund was backed by CPP Investments, PSP Investments and TD.

That concentration of domestic pension and bank capital is the most distinctive feature of the raise. Canadian pension plans are among the most sophisticated allocators in the world, but for years their venture exposure has flowed largely to American managers. Committing at scale to a Toronto-based late-stage AI fund signals a willingness to back a home-grown manager in the part of the market where cheques are largest and pricing is hardest.

Jacobs framed the problem directly. "Canada has never had a shortage of world-class AI companies," he said, adding: "What we have lacked is capital at the scale required to keep them here as they grow."

From seed specialist to growth investor

Radical made its name at the earliest stages. Cohere was its first investment, and the firm later co-led a $600m round in the company. Its portfolio also includes Waabi, World Labs, Xanadu, Periodic Labs and Veeda. In 2024 it moved into later-stage investing with an $800m growth fund. Breakouts takes that shift considerably further.

According to The Logic, the new fund will initially back 12 companies, and three existing deals have already been moved into it. Among them are Discovery Loop, co-founded by Jeff Dean, and Etched, a chip designer positioning itself as a rival to Nvidia, which has announced $1.8bn across three financings in as many months. Those two names illustrate the strategy: a small number of very large positions in companies that Radical believes are, in its words, on a path to becoming the next trillion-dollar businesses.

The firm's reasoning rests on a familiar observation about modern technology markets. The most valuable companies now stay private much longer and reach public markets at valuations of $100bn or more. The Logic cites Morgan Stanley data showing that the median age of a company at listing has doubled since the 1990s. If most of the value creation now happens in late private rounds, a firm that stops investing at Series B surrenders the bulk of the upside it helped to create.

The scale problem in Canadian venture

Before this week the benchmark for Canadian venture fund size was Georgian's 2021 alignment fund, which closed at more than $1bn. Radical's first close is roughly on par with that, and if the firm reaches a multi-billion dollar final close it would be the country's largest venture fund by a wide margin, according to CVCA and PitchBook data cited by BetaKit.

Other Canadian commitments clustered around the summit point in the same direction. Royal Bank of Canada is seeking $1bn for a growth-stage technology fund, and Intrepid Growth Partners has launched a $525m fund aimed at AI businesses. Measured against the largest American managers, however, these remain modest. Thrive Capital and General Catalyst have each reportedly targeted $10bn, and Spark Capital about $3bn. Even at its target, Breakouts would be one of many large pools chasing a small set of AI companies.

That is the core tension in the strategy. Late-stage AI rounds are crowded with crossover funds, sovereign investors, Big Tech balance sheets and the largest Silicon Valley firms. Access, not capital, is the scarce input. Radical's answer is its early relationships: it already holds stakes in companies it wants to back at scale, and it embeds staff with some of them, including two people at Discovery Loop, according to The Logic. Jacobs was candid about the odds. "No one's perfect at it," he said. "We just want to be more perfect than others."

What remains unproven

The first weakness is the record of realisations. Radical has had few publicly disclosed exits: Covariant and CentML were acquired, and Xanadu went public in March. For an early-stage manager founded in 2019, that is not unusual, since venture funds take a decade to mature. But limited partners committing to a multi-billion dollar late-stage vehicle are underwriting the firm's ability to price and manage large positions, a different skill from picking founders early, and one that has not yet been tested through a full cycle.

The second is concentration. A fund that starts with 12 companies, several of them building capital-intensive hardware or frontier models, carries the risk that two or three markdowns can define its returns. Late-stage AI valuations assume rapid revenue growth and continued access to capital; if either falters, a concentrated growth fund has less room for error than a diversified seed portfolio.

The third is the policy overlay. A fund launched on a prime ministerial stage and backed by public-sector pension plans will be judged partly on whether it keeps companies in Canada. That objective may at times sit awkwardly with fiduciary duty, for example when the best price for a portfolio company comes from a foreign acquirer or a listing in New York.

Our view

Radical's raise is the clearest sign yet that Canadian institutions are prepared to fund the late private stage of AI companies rather than leave it to American capital. That matters for founders in Toronto, Montreal and Vancouver, who until now have often had to look south once their capital needs reached hundreds of millions of dollars. A domestic lead with deep pockets and long relationships changes that conversation.

Investors should be more measured. The fund's logic is sound: value accrues late, and an early backer who cannot follow on loses its stake. But the firm is moving into the most competitive segment of the venture market with a thin record of exits and a strategy built around a dozen large bets. What to watch is the final close and the first new, rather than transferred, investments. If Radical can lead rounds at disciplined prices in companies that other large funds are also chasing, Breakouts will look like a turning point for Canadian venture. If it ends up paying whatever the market demands, the national ambition will not save the returns.

Sources

• BetaKit: Radical Ventures launches Canada's largest AI fund with $1-billion USD first close
• The Logic: Radical Ventures Breakouts fund targets AI giants
• Pulse 2.0: Radical Ventures secures more than $1 billion first close for late-stage AI Breakouts Fund

Filed under Venture Capital. Written by InvestTimes Editorial under our editorial standards. Commentary and analysis for information only, not investment advice.