One of the rising stars of Canada’s startup scene has slowly burned out.
What happened: After failing to raise more funding this year, the once-promising Canadian chip startup Untether AI is shutting down its operations, agreeing to transfer its employees to Nvidia’s chief competitor, Advanced Micro Devices.
- The “acqui-hire” deal, which won’t include any intellectual property or products, is reportedly in the $100 million range.
Catch-up: Untether’s AI chips had outperformed the competition in several key benchmarks, but it was late pivoting to a focus on generative AI, where it couldn’t overcome Nvidia’s dominance.
- While the startup was backed early on by heavyweights like Intel and CPP Investments, it couldn’t drum up any cash this year, due in part to tariff uncertainty.
Why it matters: Untether is a reminder that Canada’s tech sector doesn’t have a talent shortage, it has a scaling problem. While over 95% of Canadian startups get early-stage seed money, only 8.4% make it to a second funding round.
- That’s the lowest mark among peer countries, including the U.S., U.K. and Germany.
Bottom line: From time to time, Canada will produce a Shopify or BlackBerry, but experts say that with notoriously risk-averse investors and few deep-pocketed funds, the country will continue to struggle to turn tech startups into big players.—LA