Canadian AI: Highlights from Toronto Tech Week and a record CANSEC, big raises from Saris and Lastwall, and Sutton on the limits of generative AI."
Plus Osler's AI venture data, and more on AI-powered space-propulsion.
Good morning! Welcome to the Canadian AI Newsletter, a weekly rundown for founders, operators and investors.
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I am Raif Barbaros, Partner at Mistral Venture Partners. Views are my own.
Two big gatherings anchored the week, Toronto Tech Week and CANSEC, and I pulled the AI-related highlights from both. But the issue runs wider than that: a US$28.8M raise for a Montréal fintech, a $16M cyber round out of Fredericton, Rich Sutton making the case that generative AI can’t actually discover anything, fresh Osler data showing AI now drives more than half of all Canadian venture dollars, and a national AI strategy that Mark Carney says is finally landing this week. The thread tying much of it together is a familiar one: keeping Canadian AI Canadian, in who owns the companies, where the IP lives, and who controls the compute. Let’s get into it.
💰 Deals & Milestones
Saris AI (Montréal) raised a US$28.8M Series A to automate the back offices of banks and credit unions.
Led by Joe Lonsdale’s 8VC, with Audacious Ventures, Homebrew, and the Btech Consortium. Founders Danial Jameel, Alice Dinu, and James Dang previously built Montréal’s Oohlala Mobile.
The pitch: agentic AI that automates up to 70% of consumer, mortgage, and commercial lending workflows, with integrations into Fiserv and MeridianLink. Jameel frames it as humans and AI “side by side” in financial services.
Lastwall (Fredericton) raised $16M to defend critical infrastructure, and it’s a genuine East Coast win.
Led by BDC Capital’s StrongNorth Fund in what is its first cybersecurity investment, with the New Brunswick Innovation Foundation writing the largest cheque in its history.
The product, IDCommand, uses behavioural AI to read more than 200 login characteristics, from keystroke cadence to mouse movement, and flag anomalies before a stolen identity becomes a breach. CEO Karl Holmqvist’s framing: autonomous AI agents make stolen credentials far more dangerous, far faster.
Retired Major General Peter Dawe, now BDC’s VP of Defence Strategy, joins the board.
NordSpace (Markham) led a consortium that landed $3.2M from NGen to build what it calls Canada’s first AI-powered space-propulsion manufacturing line.
The full project is valued at over $8M, with the $3.2M coming from Next Generation Manufacturing Canada’s Advanced Manufacturing Technology Program. The output: turbopumps for NordSpace’s Tundra rocket.
The consortium is entirely Canadian-owned: NordSpace, Miltera, Pegmatis, Prime Powders, and Indigenous-owned Bear Paw Manufacturing. The AI lives in the process, in-situ quality control and Pegmatis’s manufacturing-intelligence layer, not in a payload.
It’s the sovereign-compute logic applied to the factory floor, and another NGen cheque worth tracking alongside the broader manufacturing-AI thread.
🌆 Toronto Tech Week Recap
Many heavy hitters used Toronto Tech Week to circle the same theme: keeping Canadian AI Canadian. The marquee stages kept returning to retention: keep the company here, keep the IP here, keep the power to run it here.
Raquel Urtasun (Waabi) told U of T president Melanie Woodin at BetaKit’s Most Ambitious Town Hall that physical AI is at its pre-ChatGPT moment: “Imagine you have the crystal ball before the ChatGPT moment. That’s where we are now.” Ignoring it would be “such a big miss for the country,” she said, before saying the quiet part plainly: “I want this company to remain, as much as possible, Canadian.” A clear marker from the founder of the largest raise in Canadian history.
Nick Frosst (Cohere) went structural at Homecoming’s sovereignty panel. The binding constraint on sovereign AI isn’t talent or models, it’s electricity. Canada, he argued, “just need[s] more nuclear power plants” to run it. The timing helps his case: Ontario is already building the first small modular reactor in the G7 at Darlington, backed by $3B in federal and provincial funding, the kind of clean baseload that a sovereign-compute buildout will need. (Disclosure: Cohere is a Mistral Venture Partners portfolio company.)
Taleeb Noormohamed, parliamentary secretary to AI Minister Evan Solomon, gave the clearest preview of the coming strategy at ALL IN Talks Toronto. Canadians have watched industrial-scale IP and long-term value “migrate elsewhere,” he said, and “our job is to make sure that stops.” Read alongside Carney’s “coming this week,” IP retention is shaping up to be the organizing idea.
Tobi Lütke (Shopify) pushed back on the one-person-unicorn fantasy, calling it “bullshit,” and reframed today’s tools as a “seven out of ten engineer on your phone,” not a replacement for teams. While the room talked about keeping Canadian AI here, his quieter point was about making sure there’s something durable worth keeping.
🛡️ CANSEC Recap
CANSEC was the AI-and-defence show this year, and the symbolism wasn’t subtle. Canada’s largest defence trade show ran May 27 to 28 at Ottawa’s EY Centre, now renamed the Cohere Centre after the Toronto AI firm bought the naming rights. Record crowds, a first-ever sitting-PM keynote, and a wave of sovereign-autonomy launches. The throughline, again, was keeping the capability Canadian. (Disclosure: Cohere is a Mistral Venture Partners portfolio company.)
Carney goes to CANSEC. The first sitting PM to keynote the show, Carney pledged $180B in defence procurement over ten years and named “unimpeded access to artificial intelligence” a strategic capability alongside space and quantum. On the venue’s new namesake: “If you don’t know who Cohere is, you will.”
Volatus unveils a sovereign autonomy brain. Toronto’s Volatus Aerospace introduced V-Cortex, an AI flight controller and autonomy OS on Canadian-controlled IP, pitched as the base of a “sovereign Canadian autonomy ecosystem” for uncrewed platforms.
Calian launches ATHORA. Ottawa’s Calian debuted ATHORA, an open-architecture layer to stitch sensors, networks, and legacy systems across every domain. It’s the connective tissue for the agentic-AI work Calian is doing with Cohere’s North.
INKAS goes counter-drone. Canadian maker INKAS launched ANURI, a modular AI-guided counter-UAS interceptor with visual terminal homing, claiming time-to-target under 80 seconds at five kilometres.
A 13-company Canadian autonomous vehicle. Ottawa’s Convergence Design Services launched the MIL-V, a fully electric autonomous military vehicle on 100% Canadian IP, integrating 13 Canadian firms plus Arctic OWL, a distributed edge-AI sensing network.
MDA’s 49North teams with Voyageur on ISR. MDA Space’s defence arm 49North signed an MOU with North Bay’s Voyageur Aviation to pair crewed and uncrewed aircraft with AI-enabled ISR data fusion for Canadian customers.
The Palantir question. Defence Minister David McGuinty defended a $3.7M DND data-analytics contract with U.S. firm Palantir as “a legitimate procurement” that’s “moving forward,” while saying the government “will look at this question of data sovereignty.” As the Toronto Star’s Alex Ballingall reported, the deal surfaced only through documents tabled in Parliament. An awkward counterpoint to a show themed on keeping AI Canadian.
🏢 Large Companies
Cohere (Toronto) and Calian Group (Ottawa) partnered to bring sovereign AI to the defence industry.
The collaboration puts Cohere’s secure agentic platform, North, into controlled defence environments for the Canadian military, allied forces, and SMEs, routed through Calian VENTURES.
Use cases named: mission planning, decision support, and training. It’s an evaluation-and-integration agreement rather than a signed contract, so no dollar value yet, but it’s a meaningful sovereign-AI-meets-defence signal and dovetails with the CANSEC wave above.
🔬 Research
Rich Sutton (Edmonton - University of Alberta) says generative AI literally cannot discover anything, and he wants science to stop pretending otherwise. The Alberta RL pioneer and 2024 Turing laureate posted a recorded talk, delivered to the SAIR Foundation, arguing that supervised-learning systems are stuck choosing between novel and good, and can never be both at once.
His frame is an old academic joke: the work is both novel and good, except the good parts aren’t novel and the novel parts aren’t good. That, he says, is generative AI exactly. Output is either drawn from training data (good, because the source is good) or from the model’s own randomness (novel, but unmoored). Never both in the same stroke.
The missing ingredient he names is evaluation. Real discovery needs three steps: variation, evaluation, and selective retention. Generative models only do the first. That’s why he files AlphaGo, AlphaFold, AlphaProof, and even Claude Code on the other side of the line: they evaluate against a goal, so they actually find things. Garden-variety LLMs don’t.
This is the sharpest articulation yet of the Alberta school’s bet against the LLM consensus, and it’s not idle contrarianism. Sutton grounds it in his own group’s 2024 Nature paper on continual backpropagation.
Torc Robotics partnered with Mila in the institute’s first-ever autonomous-trucking collaboration.
Torc, a Daimler Truck subsidiary, is embedding on-site at Mila with dedicated research space, working on generative world models, multi-agent behaviour modelling, reinforcement learning, and foundation models for physical AI. Mila’s Liam Paull (CIFAR AI Chair, UdeM) and Torc AI head Felix Heide are the named principals.
There’s a quiet tension worth naming here. The same week founders were on Toronto stages insisting Canadian AI stay Canadian, foreign industrial capital planted a research flag inside Canada’s flagship AI institute. Both things can be good.
🏛️ Policy
The national AI strategy is, almost, here. Carney told reporters on May 27 that the long-delayed Pan-Canadian AI strategy is “coming out next week.”
The fall 2025 consultation drew more than 11,000 comments. Six pillars have been previewed: protecting Canadians and democracy, new privacy and online-safety laws, sovereign compute, scaling Canadian AI companies, international alliances, and AI training.
Don’t hold your breath. This strategy has already slipped past end-2025 and Q1-2026 targets, and Solomon’s own office softened Carney’s “next week” to “imminent.” And then a draft was leaked to the CBC. I’m going to wait for the real thing before I comment.
SCIP’s $890M window closes today. Applications for the Sovereign Canadian AI Compute program were due June 1.
Up to ~$890M over seven years, with leads limited to Canadian non-profits, post-secondary institutions, or the consortia they head. A Queen’s University-led consortium is a named likely bidder, having recruited an ex-Nvidia supercomputing engineer and signed Simon Fraser and Bell as partners.
No winner has been named yet, so this is one to watch into next week. (And no, despite the rumours, Telus is not a SCIP winner. That’s a separate sovereign-data-centre program.)
📊 Data
Osler’s 2025 Deal Points Report confirms what we all see on the field: AI is now the centre of gravity in Canadian venture.
AI companies made up 23.6% of all financings and a striking 54% of all capital invested in 2025. As partner Ryan Unruch put it, AI is “the single largest industry captured by the report by both deal count and dollars invested.”
The premium is real: median pre-money valuations for AI companies ran roughly 60% above the rest of the market, with median round sizes about 50% larger. Osler sees a lot of deals. I find their data to be one of the most reliable in Canada.
📰 In brief
Ontario’s universities released a major AI report, “Talent, Technology and Trust,” at an Empire Club event during Toronto Tech Week. Roughly a dozen recommendations, chaired by Waterloo president Vivek Goel, with a pointed call for Ottawa to fund sovereign AI research infrastructure.
Bill C-22 keeps biting. Public Safety Minister Gary Anandasangaree rejected calls to shorten the metadata-retention period in the federal lawful-access bill, holding firm at up to one year despite pushback from Apple, Google, Meta, and the Privacy Commissioner. Signal and NordVPN have threatened to leave Canada rather than comply. The data-governance backdrop to every “build AI here” pitch.
Have a great week! See ya 👋
— Raif