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. I also run the Canadian AI Index, a free database of Canadian AI companies, founders, rounds and investors.
Prime Minister Carney named a National Council on Artificial Intelligence on Friday, with Yoshua Bengio, Sanja Fidler and Michelle Zatlyn among its members. Cohere launched North 2, Clio bought an AI company that builds for judges, and Field Effect is growing fast on a shadow-AI tool. AI agents tried to break into a Library and Archives Canada website, and a Quebec novelist wants to sue Meta over AI training. Also in this issue: deepfake detectors tested on court evidence, and Canada’s bid for special access under a proposed EU AI law. Last week I also launched the Canadian AI Index, more on that below. Let’s get into it.
🗂️ New: the Canadian AI Index
I launched the Canadian AI Index on October 1. It’s a free database of 571 Canadian AI companies, their founders and investors, with 458 funding rounds and C$15.9B in disclosed capital. Toronto has the most companies at 202, followed by Montréal (96), Vancouver (72), Kitchener-Waterloo (35) and Calgary (28). Every entry traces to a primary source, and I update it every Tuesday with this newsletter. If your company is missing or something is wrong, reply to this email.
💰 Deals & Milestones
Clio (Vancouver) bought Learned Hand, which builds AI tools for judges and courts, on September 30.
Terms weren’t disclosed. It’s Clio’s first move into the judiciary.
Field Effect (Ottawa) grew from about 9,000 to 12,000 customers in under four months on a tool that detects employees’ unsanctioned AI use, CEO Matt Holland told the Globe on October 1.
Annualized revenue is near $50M, up from $26M last year. Field Effect plans to raise US$100M in 2027.
Femtum (Québec City) opened a $2.1M factory on October 1 to build lasers that chipmakers use to make silicon photonic chips for AI data centres.
The site is six times its old footprint and follows Femtum’s $16M Series A in March.
Candidly AI (Calgary) is using AI voice agents to interview residents and employees for municipalities and consultants, with the Town of Bashaw as its first municipal client.
Data stays in Canadian data centres on self-hosted models.
H2 Analytics (Ottawa) got $800K from FedDev Ontario on October 1 toward a $4.2M upgrade of EASE, its AI platform that builds training exercises for defence and security clients.
H2 is owned by a Canadian Armed Forces veteran.
🏢 Large Companies
Cohere update: Cohere had three developments this week. (Disclosure: Cohere is a Mistral Venture Partners portfolio company.)
North 2 launched October 5. Clients can now run rival models from Anthropic, OpenAI and Google inside the agent platform and cap AI spending by team.
Aleph Alpha, Cohere’s German merger partner, released Kolibri on October 3, an open-weight model for German and English public-sector and industrial work. The weights are on Hugging Face under Apache 2.0. The merger awaits regulatory approval.
Schwarz Digits, the tech arm of Lidl’s parent and the expected US$600M lead of Cohere’s next round, is exploring compute in Canada, The Logic reported.
Enerflex (Calgary) won a contract on October 1 to build about 450 MW of off-grid, gas-fired generators that will power a North American developer’s data centre directly.
Deliveries run 2027 to 2028. Shares rose about 15%, per the Globe.
D2L (Kitchener) put its Lumi Assistant into beta on September 29 for administrative and teaching work.
🔬 Research
A team from U of T, Waterloo, UBC, Western and uOttawa altered or faked 785 of 1,505 court-style photos, such as dashcam stills and surveillance frames, with consumer AI tools.
Main finding: the best off-the-shelf detector caught 47% of the fakes and flagged 22% of the real photos. Small local edits were the hardest to catch.
So what: detection tools sold for courts and insurance claims fail this test. The Canadian AI Safety Institute funded the work.
Mila, McGill, ServiceNow Research and Université Laval tested whether AI web agents can infer a user’s preferences from past browsing, across 480 tasks.
Main finding: agents told the user’s preferences succeeded 83% of the time. Agents that had to infer them topped out at 16%.
So what: personalization is still an open problem for startups selling web agents.
🏛️ Policy
Prime Minister Carney named a National Council on Artificial Intelligence on October 2 to advise on the AI for All strategy, national champions, sovereign infrastructure and safety. A small team in the Privy Council Office will support it. The Logic and BetaKit also listed CPP Investments CEO John Graham as a member, but the PMO release does not. The members named by the PMO:
Ajay Agrawal, professor, U of T; co-founder, Intrepid Growth Partners. Founded Creative Destruction Lab.
Yoshua Bengio, scientific director, LawZero; professor, Université de Montréal. Mila founder, Turing Award winner.
Sanja Fidler, CEO, Veeda AI; professor, U of T. Former Nvidia VP of AI research.
Gillian Hadfield, professor, Johns Hopkins; Vector faculty. Founding director, Schwartz Reisman Institute.
Jordan Jacobs, co-founder and managing partner, Radical Ventures. Vector co-founder.
Eric Lamarre, board member, WSP Global. Former McKinsey senior partner; co-author of Rewired.
Valérie Pisano, president and CEO, Mila. Only national AI institute head on the council.
Thomas Pitfield, Senator (Ontario). Carney’s former principal secretary.
Jody Thomas, former National Security and Intelligence Advisor. Advised Trudeau and Carney.
Louis Vachon, former CEO, National Bank of Canada. Ran National Bank from 2007 to 2021.
Michelle Zatlyn, co-founder and president, Cloudflare. Grew up in Prince Albert, Saskatchewan.
Patrick Pichette (ex officio), CEO, Digital Transformation Canada. Former Google CFO, Inovia partner.
Canada will seek “associated country” status under the EU’s proposed Cloud and AI Development Act, according to a leaked draft joint statement reported October 1.
It would let Canadian firms bid on sensitive EU contracts the law closes to non-EU providers. The partnership launches at a Montréal summit this month.
AI agents tried to break into a Library and Archives Canada website on May 28 and June 9, AI research lab Transluce reported September 30.
The attempts failed. Transluce said the tactics match agents it previously tied to OpenAI but did not attribute these, per CBC.
Anne Robillard, author of the Chevaliers d’Émeraude fantasy series, asked Quebec Superior Court on October 5 to authorize a class action against Meta over AI training.
She alleges Meta trained on her books and other authors’ works without permission.
Sherbrooke‘s planned AI data centre is splitting council and residents, Le Devoir reported October 2.
The developer is Keel Infrastructure, formerly Bitfarms.
📊 Data
OntarioMD found 67% of Ontario community clinicians have used an AI tool in practice, and 58% have used an AI scribe.
IBM found 62% of Canadian employees worry AI is eroding their skills, and critical thinking is the skill they name most.
68% of Canadian CHROs rank checking AI output as the top skill. 29% of Canadian employees rank judgement as important. Globally, only 7% of executives are building up early-career talent.
Geneviève Bich, CHRO of Montréal’s METRO, in the report: “If the reinvestment is you’ve saved 10 minutes per person per day and it goes into doing one more email, that’s not a good use of anyone’s time.”
📰 In brief
Paul Christiano, who developed RLHF at OpenAI, will give the 2026 Hinton Lectures in Toronto, November 9 to 11.
Calian and Invest Ottawa launched the Northstar Defence Lab at Area X.O on September 29, the first in Calian’s planned national network of defence labs.
Grande Prairie County permitted an AI data centre.
Université de Montréal adopted an AI vision statement on September 30.
Manulife Canada added Sword’s AI physiotherapy to its group benefits.
At Energy Disruptors in Calgary, a panel said Alberta entered the AI boom with about 1.2 GW of spare generation, and Moment Energy (B.C.) pitched retired EV batteries as data-centre power.
Rakovina Therapeutics (Vancouver) partnered with Boston’s Celvion to use AI on real-world clinical data for its cancer drug program.
Innovatree Carbon Group (Kamloops) won Telus’s AI Innovation Award for Forest Guardian, which maps forests tree by tree with LiDAR and machine learning.
Brookfield‘s Connor Teskey said there’s enough AI infrastructure work to partner with rivals.
Rewind (Ottawa) CEO Mike Potter said AI is driving demand for its developer backups after H.I.G. took majority control this summer. (Disclosure: Rewind is a Mistral Venture Partners portfolio company.)
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— Raif