Beacon Software, a Toronto-based artificial intelligence holding company that launched just last year, has raised US$250-million to fund its strategy of buying smaller software companies and using AI to grow them.

The Series B round, announced Tuesday, was led by U.S. investment firms General Catalyst, Lightspeed Venture Partners and D1 Capital. The latest infusion brings the total Beacon has raised to date to US$335-million, reflecting investors’ confidence in how AI-driven automations will transform essential industries.

According to Reuters, the funding valued the privately held company at $1-billion.

Beacon was co-founded by Canadian CEO Nilam Ganenthiran, who was previously president of Instacart, and its chief technology officer Divya Gupta, a former partner at Sequoia Capital. Beacon’s approach, which the founders describe as “AI-powered reinvention,” targets businesses that power everyday life – across sectors like education, finance and recreation – but often rely on outdated systems.

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The company said it has already purchased dozens of profitable software businesses and equipped them with AI-powered tools to improve operations and boost profitability. In an interview with The Globe and Mail, Mr. Ganenthiran said the company can take a business growing at 25 per cent with 25 per cent profit margins and raise it to about 30 per cent growth and 30 per cent profit margins within a year.

“In the last year-and-a-half, we’ve found that the need for technology in Main Street is only expanding,” Mr. Ganenthiran said. “The best way to get transformative technology into the hands of real-world customers is by using the incumbents who they already trust.”

Mr. Ganenthiran added that the new capital will help Beacon partner with more founders, acquire additional businesses and expand its AI-driven technology platform to support them. The goal is to help bridge the gap between AI-driven technology and real-world industries, he said.

Beacon’s investors – including merchant bank BDT & MSD Partners and Fidji Simo, former Instacart CEO and OpenAI’s incoming CEO of applications – are active AI backers.

While the majority of the investors are American or global firms, Mr. Ganenthiran said this reflects the challenges Canadian entrepreneurs often face in accessing capital.

“As a proud Canadian, we need to do a better job of making sure we have great capital available for entrepreneurs who are starting out and wanting to build the next great technology,” Mr. Ganenthiran said.

Beacon’s roll-up strategy is similar to Canadian firms like Constellation Software Inc., which acquired more than 1,000 small software firms serving niche businesses. Constellation, a publicly traded firm, has seen its stock drop recently amid concerns that it is falling behind in the AI race.