Montreal-based Element AI to be bought by U.S. firm
Element AI’s ownership is headed across the border and into U.S. hands after years of being touted as one of Canada’s most promising technology companies.
The Montreal-based firm that creates artificial intelligence solutions for large organizations announced Monday that it has signed a deal to be purchased by ServiceNow, a Santa Clara, California, company that offers a cloud-based workflow technology.
The companies did not disclose the financial terms of their agreement, and expect the acquisition to close next year.
“Element AI’s vision has always been to redefine how companies use AI to help people work smarter,” said Element AI founder and chief executive Jean-François Gagné in a statement. “ServiceNow is the clear partner for us to apply our talent and technology to the most significant challenges facing the enterprise today.”
Though ServiceNow said the acquisition will help it create a Canadian hub for consumerfocused innovation, the deal will see one of Montreal’s most prized AI companies put into the control of Americans.
Monday’s acquisition should serve as “another cautionary tale” for Canadian politicians because it comes just after Waterloo, Ont., smart glasses company North was sold to Google in the summer, said Jim Balsillie, the former BlackBerry Ltd. co-chief executive and current chairman of the Council of Canadian Innovators.
“Canada actually has marketproven AI companies with entrepreneurs building successful businesses, and it’s high time they receive the attention they earned,” he said via email.
Element AI was founded in Montreal in 2016 by Gagné, Anne Martel, Nicolas Chapados, Jean-Sebastien Cournoyer, Philippe Beaudoin and one of the godfathers of AI, Yoshua Bengio.
The company quickly became a pioneer in AI after it raised a Series A funding round of $135 million in its first seven months and opened five offices across North America, Europe and Asia.
It got a $5-million loan from the federal government two years later to expand the company further.
Then more cash arrived last year from the Quebec government, pension fund Caisse de depot et placement du Quebec, and McKinsey and Company.
The investors handed over $200 million in a Series B round of funding.
Pierre Fitzgibbon, Quebec’s minister of economy and innovation, said Monday’s deal means that Element AI’s business model ultimately did not work, but he was relieved the government still managed to break even with its investments.
“The bad news is that the Quebec shareholder is no longer what it was, which is sad,” he said. He was, however, pleased that at least ServiceNow has found value in Element AI.
The two companies will have to wait for approvals before their deal can close, but expect that to happen in early 2021.
They said Bengio will serve as a technical adviser for ServiceNow.