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.
Seven Canadian AI startups got funded this week! One of the busiest weeks since I started this newsletter. Fantastic end to the summer and kick-off to the fall. Ottawa also released national data centre principles with 23 signatories, and OpenAI was hit with roughly 30 new lawsuits over the Tumbler Ridge shooting. The feds launched Digital Transformation Canada with INovia’s Patrick Pichette as CEO, and SOCAN, the industry non-profit representing Canadian songwriters, sued AI music generator Suno in Federal Court. I’d forgotten this, but Canadian law has no concept of fair use. Let’s get into it.
💰 Deals & Milestones
Mundo (Vancouver) announced US$24M in total funding: a US$20M Series A led by GreatPoint Ventures plus a previously undisclosed US$4M seed.
The 30-person company, founded in 2024 by four UBC alumni, builds the audio, video, and multimodal datasets and evaluations that AI labs use to train models on sensory information. Y Combinator, E12 Ventures, and Next Frontier Capital participated.
The announcement was August 24, and I missed it last week, so sharing it now to catch up. Or catch-back? You get what I mean.
Meissner (Toronto) closed US$2.6M in pre-seed funding led by BDC Capital’s Thrive Venture Fund.
The company uses AI to identify metallic alloys that could work as superconductors, with quantum simulations to filter candidates, and runs lab work at the University of Waterloo’s nanofab centre. CEO Olivia Leng founded it a year ago while studying chemistry at U of T.
Angels include Dominion Dynamics CEO Eliot Pence, General Fusion CEO Greg Twinney, Daniel Debow, Michael and Richard Hyatt, Anthony Lacavera, and Xanadu CEO Christian Weedbrook.
Scopia Surgical (Montréal) closed an oversubscribed C$2.65M pre-seed co-led by Linearis Ventures and Anges Québec.
The computer-vision platform pairs real-time spatial tracking with patient-specific digital twins to guide minimally invasive and robotic surgery. Fonds Impulsion, HaloHealth, and Intelerad co-founder Richard Rubin participated, and the funds carry the company into first clinical evaluations.
Protein Industries Canada (Regina) committed up to $2.2M to two AI agtech projects worth $4.9M combined.
TerraVision360, Metos Canada, and Rocky Mountain Equipment will build a blight-forecasting tool for pulse crops. Super GeoAI and Southview Farms will build a drone-and-LiDAR system that measures grain volumes in bins so workers stop climbing them.
The Wellness Company (Toronto) closed nearly C$1.6M in seed funding led by BDC Capital’s Seed Venture Fund, with BKR Capital and Jason Calacanis’ Launch.
Its product Tempo is an AI health companion that lives in iMessage and builds personalized plans from the company’s health and wearable apps.
NorBot (Vancouver) raised C$1M in pre-seed funding from undisclosed Canadian founders and operators to become a commercial robotics integrator.
NorBot sources, deploys, and manages robots for Canadian businesses through its fleet-management and digital-twin software, with supplier agreements signed with four manufacturers and paid pilots underway with one of Canada’s largest commercial landlords.
The pitch includes keeping the data those robots generate in Canada.
ASI Engineering (Regina) landed $980K in repayable federal funding from PrairiesCan to scale its AI platform for monitoring roads, buildings, and water systems.
This is government scale-up money rather than an equity round.
Good to see Saskatchewan in the deals column twice this week.
🏢 Large Companies
OpenAI was hit with a second wave of lawsuits over the February Tumbler Ridge school shooting, filed September 2 in US federal court in California.
Chicago’s Edelson PC and Vancouver’s Rice Parsons Leoni & Elliott represent roughly 30 new plaintiffs, including students, teachers, and the school’s principal, joining the seven suits filed in April. Sam Altman is named as a defendant.
The new complaints add an aiding-and-abetting claim and allege OpenAI’s safety team repeatedly urged notifying authorities about the shooter’s ChatGPT activity and was overridden by public-affairs leadership. Yikes. One complaint contrasts OpenAI locking down its own offices when staff were threatened with its silence toward Canadian authorities.
OpenAI has separately asked the court to dismiss the original seven suits, arguing British Columbia is the proper venue. The BC government’s threatened claim still hasn't been filed.
🔬 Research
York/Vector + Mila probed what two leading video foundation models, V-JEPA 2 and VideoMAE-v2, actually encode, layer by layer.
Main finding: the models detect camera motion with over 90% accuracy but score at coin-flip levels on basic physics like object permanence, at every layer of every model tested.
So what: these models are the base layer of the physical-AI wave, and the result contradicts Meta’s own earlier claims on a harder benchmark.
Physical AI is a key piece of the next frontier. This study shows video models are not quite there yet. Helps explain why so much money has gone into this research.
UdeM/Mila astrophysicists tested whether tabular foundation models, which fill in spreadsheet values the way chatbots fill in text, learned any physics along the way.
Main finding: the models beat six conventional baselines across 316 physics equations, even after the baselines got tuning help, yet their prior cannot represent an exact noise-free law or physical units. Switch metres to feet and the model doesn’t notice.
So what: these tools interpolate physical data impressively without being physical models, which scientists adopting them for real measurement work need to know.
ÉTS Montréal + Mila tested whether a model that has “unlearned” data for privacy or copyright reasons has actually forgotten it.
Main finding: synthetic probe inputs plus a single gradient step can reactivate a supposedly erased class, using nothing except the scrubbed model itself. Low accuracy on forgotten data often means the knowledge is hidden rather than gone.
So what: as deletion obligations surface in privacy and copyright disputes, claims of unlearning will need audits like this to mean anything. This study showed that current ways of “deleting” are not really, you know, “deleting.”
🏛️ Policy
Ottawa launched Canada’s Responsible Data Centre Development Principles on September 3, announced by AI Minister Evan Solomon in Markham with 23 corporate signatories.
The five principles: create lasting local benefits, do not shift electricity costs to Canadians, minimize water and environmental impacts, be transparent about local impacts, and bring strategic value to Canada. Signatories include AWS, Google, Microsoft, Anthropic, Meta, OpenAI, Bell, TELUS, QScale, eStruxture, and Cohere. (Disclosure: Cohere is a Mistral Venture Partners portfolio company.)
The framework carries no binding definitions, no penalties, and no commitment on what energy powers new builds. It sits alongside Ontario’s draft playbook, which charges data centres full electricity costs, and Alberta’s 2% hardware levy taking effect December 31.
The provinces still hold the tools that matter here: rates, permits, and grid connections.
The federal government launched Digital Transformation Canada on September 3 and named former Google CFO and current Inovia Partner Patrick Pichette as its first CEO.
The agency absorbs Shared Services Canada, the Canadian Digital Service, and functions from Treasury Board and PSPC, with a mandate to scale AI across government and use federal procurement to help Canadian tech firms grow. Pichette led Inovia’s investments in Cohere, Hopper, and Wealthsimple.
SOCAN (the Society of Composers, Authors and Music Publishers of Canada, which collects performance royalties for more than 200,000 Canadian songwriters, composers, and publishers) sued AI music generator Suno in the Federal Court of Canada on September 2, alleging its platform generates and streams outputs that copy songs in SOCAN’s repertoire.
The claim cites 150 sample outputs resembling works by Avril Lavigne, The Tragically Hip, Tom Cochrane, Céline Dion, and Joni Mitchell, and seeks damages plus an order to stop.
Fair use, Suno’s defence in its US label suits, does not exist in Canadian copyright law. CEO Jennifer Brown framed the case as cultural sovereignty.
📊 Data
StatCan released the final Canadian Survey on Business Conditions on August 31, closing out the quarterly series that has tracked business AI adoption since 2020.
25.2% of businesses plan to use AI in the next 12 months, up from 14.5% a year ago. Of the 52.7% with no plans, 79.1% say AI is not relevant to what they produce.
A successor program, TechStat, takes over with $25M from Budget 2025.
📰 In brief
Ontario’s consultation on its draft Data Centre Playbook closes September 12.
Alberta’s data centre town hall tour wraps up in Grande Prairie on September 11.
Co.Labs (Saskatoon) launched a program helping non-tech businesses adopt AI.
Opti9 acquired Hut 8’s Canadian managed cloud business, including a multi-year colocation agreement at Hut 8’s Canadian data centres.
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— Raif