Good morning! Welcome to the Canadian AI Newsletter, a weekly rundown for founders, operators and investors.
Was this forwarded to you? Subscribe below.
I am Raif Barbaros, Partner at Mistral Venture Partners. Views are my own.
The big story this week is Ontario’s draft Data Centre Playbook, announced August 13, which tells data centres to pay their full electricity costs and expect no cash incentives. Also this week: Kitchener-Waterloo’s Convictional is shutting down and returning capital to investors, Peripheral raised US$8.7M to bring self-driving-car techniques to live sports, and two Montréal startups took on elder fraud and construction financing. Plus a Nanos poll on data-centre incentives and Mila research on securing AI agents. Let’s get into it.
💰 Deals & Milestones
Convictional (Kitchener-Waterloo) is shutting down on August 27 and returning its remaining capital to investors, after its pivot to an AI-native team communication tool failed to find product-market fit.
The Y Combinator-backed company raised $50.7M CAD for its original B2B commerce platform, divested that business (Modern Dropship, 3,000 customers, roughly US$2M net revenue) in early 2025, and bet the treasury on rebuilding Slack for the AI era.
CEO Roger Kirkness says several years of runway will go back to investors. This can be a controversial topic among founders and investors. If the original thesis doesn’t work out, and there’s money left, what do you do? Keep trying different ideas until the money is out? Or do you return capital? In my experience, it’s really very case- and individual-specific. What I do know for sure is that it takes a lot of courage to do what Roger did.
Peripheral Labs (Toronto) raised US$8.7M from Deloitte Ventures and Inovia Capital to build spatial intelligence for live sports, announced August 17.
The company reconstructs 3D volumetric video from standard broadcast feeds using perception techniques from autonomous driving. Founders Kelvin Cui and Mustafa Khan came out of the University of Toronto’s self-driving and robotics teams and launched the company from San Francisco in October 2024.
The raise follows a US$3.6M seed led by Khosla Ventures and the QSLA basketball biomechanics lab the company opened in Toronto, covered here in May.
Legio (Toronto) raised a US$5M seed round from Klass Capital for an AI-native campus safety platform for higher education, announced August 11.
The software sits on live dispatch and incident data and auto-generates the compliance documents campus security teams produce by hand, including daily crime logs and Annual Security Reports.
Founded in April 2026 by CEO Darren Hill, CTO Mike Wertman, and CPO Joe Crampton. Hill is an operating partner at Klass and Wertman is Klass’s CTO; Klass is the round’s sole investor.
OnGuardAI (Montréal and Atlanta) launched an app that flags scam calls in real time, texting both the user and a family member while a suspicious call is still in progress, released Friday to coincide with National Financial Awareness Day in the US.
Co-founder and CEO Richard Gotlieb started the company after his father was targeted by a scam caller. Analysis happens only during the call; the company says it keeps no recordings or transcripts once a call ends.
The app targets seniors, the group phone fraudsters most often target. The Canadian Anti-Fraud Centre puts Canadian fraud losses at $643M in 2024, up nearly 300% since 2020.
Brdg (Montréal) raised an $850K pre-seed round from Forum Ventures and undisclosed strategic investors to automate construction loan draws, announced August 17.
Draws are the phased payments lenders release as a project hits milestones, a process still run manually between developers, cost consultants, and lenders. Co-founders Ness Cabessa and Samuel Brand came from general contracting and development, respectively, and launched the company in 2024 with Daniel Bensoussan.
The round closed earlier this month as a SAFE. The closest comparable is Built in the US; Brdg’s distribution runs through partnerships with cost consultants.
🔬 Research
Christopher Pal of Mila and Polytechnique Montréal, with a ServiceNow Research team including Gabriel Huang and Alexandre Drouin, posted a study on cleaning compromised AI agents (arXiv, August 11).
A backdoor is a hidden instruction planted in a model, through poisoned training data, that makes an agent misbehave when it sees a specific trigger phrase. The risk for companies deploying agents is that the model looks normal until someone uses the trigger.
The team’s fix: deliberately plant a backdoor you control, then train the model to unlearn it, which pulls the hidden ones out with it. Across 115 experiments, the method wiped out nearly all planted backdoors, though faint traces of the triggers remained detectable inside the model.
🏛️ Policy
Ontario released a draft Data Centre Playbook on August 13, requiring data centres to pay their full electricity costs, with no cash incentives and a new dedicated rate class for large projects priced above the industrial rate.
Premier Doug Ford, announcing the framework in Guelph: “If any data centre thinks they’re coming into Ontario and getting a freebie: not happening.” Projects will be assessed on three pillars: economic development, data security and digital sovereignty, and community benefit. A 30-day consultation is open, and the province projects data centres will account for about 13% of new electricity demand by 2035.
The playbook is a first piece of Ontario’s forthcoming AI Industrial Strategy. It is the firmest line any province has drawn under the data-centre buildout so far.
The no-incentives stance largely reflects public opinion, here and abroad; see the Nanos survey below. The nuance: opposing government subsidies for data centres is not the same as opposing data centres.
The Council of Canadian Innovators published “The Scale-Up Gap” on August 11, based on interviews with 31 founders across 30 Canadian companies acquired by foreign buyers.
The report finds companies sell when scaling becomes most complex and capital-intensive, and it names four recurring barriers: domestic customers, growth capital, specialized talent, and ecosystem cohesion. In 93% of cases, leadership and strategic decision-making moved abroad after the acquisition.
AMD’s acquisition of Taalas, covered here last week, is among the featured exits.
In my experience, the main issue is a lack of growth capital in the rounds before an acquisition. When a Canadian startup raises a large A or B, or later, it’s likely led by a US firm, which likely pushes it to switch to Delaware. Once that is done, getting acquired by a US company really makes no difference.
📊 Data
A Nanos Research poll for the Globe and Mail found 64% of Canadians oppose or somewhat oppose government financial incentives for AI data centres, published August 11.
The split: 38% opposed, 26% somewhat opposed, and 28% supportive or somewhat supportive. It is the first national polling specifically on data-centre incentives.
📰 In brief
An Ottawa tech worker built an app that detects nearby smart glasses to warn people they may be recorded.
Vass Bednar of the Canadian Shield Institute joined the BetaKit Podcast to ask whether Canada can function without American tech.
Thank you for reading! Subscribe, and please share any feedback 🙏🏽
— Raif