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.
Toronto’s Biossil raised US$153M at a US$1B valuation with OpenAI’s startup fund in the round, and B.C. has sued OpenAI over the Tumbler Ridge shooting. Heidi, Axya and Astrus also raised, Cohere signed deals with TD and Bell Cyber, and Shopify is now the checkout for Meta’s AI agent. Ottawa put $162M into AI work placements and Ontario gave the Vector Institute $30M. Also in this issue: AI hacking agents tested by the National Research Council, imaging AI in six Canadian hospitals, and shopping agents that fall for $4.99. Let’s get into it.
💰 Deals & Milestones
Biossil (Toronto) raised US$153M at a US$1B valuation with OpenAI’s startup fund in the round, the Globe reported September 28; CEO Anthony Mouchantaf confirmed it.
Biossil uses LLMs to find drug candidates that pharma companies shelved after failed trials, then licenses or buys them. It left stealth in April with more than US$68M raised.
Heidi (Melbourne), the AI medical scribe, raised US$340M on September 22.
Blackbird led a US$100M Series C at a US$900M valuation; the other US$240M is revenue-based financing from General Catalyst. Heidi named Toronto its North American headquarters on September 3. Canada is its second-largest market.
Axya (Montréal) raised a C$17M Series A led by McRock Capital for its AI procurement platform for manufacturers.
Yamaha Motor Ventures joined BDC and Real Ventures; Canadian Fintech puts the split at $12M equity and $5M CIBC debt.
Astrus (Kitchener-Waterloo and Toronto) raised a US$12M Series A led by Caffeinated Capital to automate analog chip layout with reinforcement learning.
Analog layout is still done largely by hand. Khosla Ventures and Garage Capital participated.
Transformer Lab (Kitchener-Waterloo) launched Primus Society on September 24, a simulated city of 10,000 AI researcher agents that pick problems and work on them with little human direction.
Jobber (Edmonton) launched Jobber Teammate on September 23, an AI agent that briefs home-service business owners each morning and takes on tasks across the business.
Alebex AI (Vancouver) ranked eighth on Artificial Analysis’ streaming speech-to-text leaderboard, ahead of Google, Microsoft, Nvidia and Amazon, per the company.
ThoughtWire (Toronto), which sells AI digital-twin software to hospitals, is under creditor protection and running a sale process; bids are due October 20.
🏢 Large Companies
Cohere update: Cohere signed two deals with Canadian enterprises this week. (Disclosure: Cohere is a Mistral Venture Partners portfolio company.)
TD committed up to $25M over three years to work with Cohere through Layer 6, its AI lab. A Cohere team will sit with Layer 6 at MaRS.
Bell Cyber put a Cohere-built cybersecurity model into production in its security operations centre, trained on Bell’s own data and running on Bell AI Fabric.
Shopify (Ottawa) is the checkout for Muse, Meta’s AI agent, which can now buy from any Shopify store through Shop Pay.
Harvey took US$50M from Ontario Teachers’ Venture Growth.
Harvey has now raised US$600M in total and says it works with more than 100 Canadian law firms and legal teams.
Manulife launched a travel-insurance plugin inside ChatGPT, first of its kind anywhere.
🔬 Research
National Research Council researchers at the Canadian AI Safety Institute ran six AI models as autonomous hackers inside a simulated corporate network.
Main finding: in the harder scenario, no model finished the last three of ten attack steps. Most stalled at stealing credentials and moving between machines, and the models’ own checkers overrated their progress.
The models tested (Claude Opus 4.5 and Sonnet 4.5, Gemini 3 Pro Preview, GPT-5.1, GPT-4o-mini and DeepSeek-V3.2) are a generation or more behind the frontier. I’m writing a longer piece on AI and hacking, out soon!
A team from the Montreal Heart Institute, Polytechnique Montréal, CHUM, UHN, the Ottawa Heart Institute and U of A described running PACS-AI, their open-source imaging-AI platform, across six Canadian hospitals.
Main finding: 85% of AI jobs were completed, and clinician consults of the results rose from about 50 to about 110 a month. Most failures traced back to hospital infrastructure and integration.
So what: this is so typical of enterprise software. The bottleneck is rarely the shiny new tech we all talk about. It’s the boring stuff, like infrastructure, change management or systems integration.
McGill’s Desautels Faculty of Management had eight current AI models shop for the best-value bag of coffee, and varied what they could see and what looking things up cost.
Main finding: with every price and weight in view, seven of eight picked the best deal 99.7% of the time. When lookups had a cost, and the instructions were vague, agents skipped the unit-price math and went for the $4.99 tag or the bigger discount, the same tricks that work on people :)
🏛️ Policy
Tumbler Ridge update: B.C. and the Peace River South school district sued OpenAI and Sam Altman in U.S. federal court in San Francisco on September 21.
The suit alleges a defective product and negligence. The province wants OpenAI to cover the costs of the damage and of victim services.
On September 24, Mother Jones reported that ChatGPT gave the shooter tactical advice and helped her get around its safeguards. B.C.’s Attorney-General and AI Minister Evan Solomon said they were alarmed.
Ontario committed $30M to the Vector Institute on September 25, the first award under its revamped Critical Technologies Initiative.
Ottawa committed up to $162M over five years to Mitacs on September 25 for 10,000 AI work placements at Canadian businesses.
They count toward the 90,000 AI job and placement opportunities that AI for All promises by 2031.
Nineteen more companies signed Canada’s voluntary data-centre principles on September 22, including AMD, Nvidia, Intel, IBM, and Lenovo, bringing the total to 42.
A senior Canadian Armed Forces commander told the Canadian Robotics Council on September 22 that the military will move fast to buy low-cost autonomous systems and AI.
📊 Data
CDW Canada found 58% of Canadian organizations now approve AI tools at work, up from 28% in 2024, and 34% of office workers use agentic AI.
📰 In brief
Mastercard, Flybits (Toronto) and Rogers Bank completed Canada’s first agentic commerce transaction, announced September 21; we missed it last week.
Amii‘s Ross Mitchell won a $1M CIHR grant for an AI tool for inflammatory bowel disease care (Edmonton).
HEALWELL AI expanded its SMART Summary AI across New Brunswick’s health system.
A U of T study found AI scribes could cut physicians’ paperwork and burnout.
Waabi COO Lior Ron said at Nrth its self-driving trucks are ready to deploy.
Dream Photonics (Vancouver) won the 2026 New Ventures BC competition and $110K.
DIAGNOS (Brossard) filed its AI retinal-screening system with the U.S. FDA.
Nvidia’s Jensen Huang called Geoffrey Hinton’s AI warnings “irresponsible” on the Ezra Klein Show; Hinton answered on Radio Atlantic.
Tailscale (Toronto) has doubled to 40,000 business customers since November on demand from AI builders.
Meta’s Sturgeon County data centre could raise Alberta power bills, experts told CBC.
Quebec election: the Parti Québécois pledged an expert committee to oversee AI. The vote is October 5.
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— Raif