Intrepid Growth Partners leaders (from left) Ajay Agrawal, Mark Machin and Mark Shulgan, in the Schwartz Reisman Innovation Campus at the University of Toronto in Toronto, on Sunday. Their team steers the firm’s investment portfolio toward cutting‑edge AI research and innovation.Alejandro Gomez Garcia/The Globe and Mail
Intrepid Growth Partners, an AI-focused financier co-founded by ex-Canada Pension Plan Investment Board chief executive officer Mark Machin, has raised US$525-million for its first fund.
The firm, which is based in Toronto and London, will announce the fund closing, US$25-million above its target, on Monday, at the start of a week of events in Toronto, anchored by a summit hosted by Prime Minister Mark Carney, showcasing big-ticket Canadian financing opportunities for global investors.
“Canada has been a leader for decades in AI and has an opportunity to be one of the most interesting markets” as the technology transforms the global economy, Mr. Machin said in an interview. “If Canada handles this correctly, it will continue to punch well above its weight on this important shift.”
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Intrepid, which has made nine investments, including four in Canada, raised most of its backing from foreign investors, among them Temasek, Abu Dhabi Investment Council and four other sovereign wealth funds. Mr. Machin said investors from Asia and the Middle East accounted for 30 per cent of funds raised, while 15 per cent came from Europe (including the U.K. government’s British Business Bank) and 10 per cent from the U.S.
The remaining backing was from domestic sources including Canadian Imperial Bank of Commerce, Bank of Nova Scotia, HarbourVest Canada Growth Fund, Northleaf Capital Partners and Telus Corp. Crown corporations Export Development Canada and Business Development Bank of Canada also participated.
Intrepid is one of a small but growing number of Canadian allocators of “growth capital” – money earmarked for fast-growing companies that have matured past startup size – competing against foreign investors that dominate later-stage financing here. Domestic players include Georgian, Inovia Capital, Radical Ventures, Maverix Private Equity, BDC and EDC. The federal government in June announced a $500-million Canadian Tech Growth Fund and last week, Royal Bank of Canada unveiled a $1.4-billion growth fund to back Canadian tech leaders.
Mr. Machin co-founded Intrepid in 2023 with Mark Shulgan, who previously led growth equity for CPPIB and Ontario Municipal Employees’ Retirement System, and the University of Toronto’s Rotman School of Business professor Ajay Agrawal, founder of the Creative Destruction Lab accelerator and co-author of two books on the economics of AI.
UK-born (and based), Mr. Machin pushed CPPIB, during his time as CEO from 2016 through 2021, to invest more in technology and innovation. On his watch, CPPIB backed Deep Genomics, a University of Toronto spinout that uses AI for drug discovery, and Alphabet Inc.’s driverless car unit Waymo.
Intrepid’s advisers include Turing Award winner Richard Sutton, a pioneer of reinforcement learning; Shopify Inc. president Harley Finkelstein; and Sir Mike Wigston, former chief of air staff with Britain’s Royal Air Force.
Intrepid invests up to US$50-million per company in sectors including industrial automation, design and robotics, financial services, health care, cybersecurity/defence and legaltech.
Its investing thesis is that AI will continue to rapidly advance and that the winners will be companies that expand beyond selling “point solutions” offering narrow benefits, said Prof. Agrawal in an interview. They will instead evolve into providers of “system solutions” that transform workflows and processes with AI.
Intrepid believes those companies can grow in size to rival what are known as the “Mag 7” (tech companies valued at more than US$1-trillion, including Alphabet and Nvidia). Prof. Agrawal said the future “Mag 100″ would feature “very large companies across almost every industry,” centred around AI. “We look at companies to make the case how we imagine they could be” in that group.
The firm focuses on Canada and Britain as each country has robust AI sectors, but also less competition for deals than Silicon Valley, and smaller-sized funding rounds. Its Canadian portfolio includes StackAdapt Inc., Beacon Acquisition Corp. (known as Beacon Software), CoLab Software and Blue J Legal Inc.
Intrepid’s thesis and vision impressed Beacon co-founder Nilam Ganenthiran – former president of grocery delivery giant Instacart – who is building a rival to software consolidator Constellation Software with a plan that leans into arming acquired companies with AI tools.
Mr. Ganenthiran said in an interview that while Intrepid was a late joiner to a US$225-million growth funding this year, it has emerged as a key adviser to Toronto-based Beacon, which has bought 45 businesses and is approaching US$200-million in annual revenues.
“They’re one of my first three calls and they don’t even have a board seat or board observer rights,” he said. “They are integral partners in the Beacon build.”
Intrepid’s fund close comes as concerns grow about AI, including a valuation bubble. “There will certainly be bubbles as there have been in any prior technology transformation,” Mr. Shulgan said. “The enduring value will be captured by companies that can emerge to be category leaders and that have founders at the helm that will drive them and be resilient” during periods of market turmoil.