Not every Canadian startup is in a place to close massive funding rounds, but the ones that are offer clear lessons for everyone else.
What happened: Legal tech startup Clio raised US$900 million — the biggest funding round ever in Canadian tech — valuing it at $3 billion. That came one day after AI company Cohere closed $500 million in new funding, doubling its valuation to $5.5 billion.
Catch-up: Clio offers software for legal practices, from client management to automated document drafting, and has been pushing to incorporate more AI. Cohere builds AI models customized to business client needs, instead of the chatbots its consumer-focused counterparts make.
Why it matters: The odds seemed stacked against these rounds. Economic uncertainty has softened venture investment, and growing consensus about an AI bubble is making investors think twice about companies leaning into AI for growth.
Why it's happening: Both companies did what investors clamour for: generate lots of revenue. Cohere reportedly reached $35 million in annualized revenue at the end of March — up from $13 million just three months earlier — while Clio now has $200 million in annual recurring revenue.
- Clio is also avoiding the ice-cold Canadian IPO market. Curt Sigfstead, Clio’s CFO, says interest sparked by its last funding round, plus filling big demand for legal software, meant private markets have been way more supportive.
Bottom line: Isaac Souweine, partner at Pender Ventures, says Clio is piquing investor interest because it is focused on a specific industry, has traction with clients, and is working AI into a proven software business. For Cohere, he says it shows the capital you can unlock by building credibility, which co-founder Aidan Gomez did as a researcher at Google’s DeepMind.