Beacon Software, a Toronto-based artificial intelligence holding company founded just last year, has raised $250 million to fund its strategy to acquire smaller software companies and use AI to grow them.
The Series B round, announced on Tuesday, was led by US investment firms General Catalyst, Lightspeed Venture Partners and D1 Capital. This injection brings Beacon’s total raised to date to US$335 million, reflecting investors’ confidence in how AI-driven automation will transform critical industries.
The funding valued the privately held company at $1 billion, according to Reuters.
Beacon was co-founded by Canadian CEO Nilam Ganenthiran, who was president of Instacart, and Divya Gupta, chief technology officer and former partner at Sequoia Capital. Beacon’s approach, which its founders describe as “AI-powered reinvention,” targets companies that power everyday life across sectors such as education, finance and recreation, but often rely on outdated systems.
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The company said it has already acquired dozens of profitable software companies and is deploying AI-powered tools to improve operations and increase profitability. In an interview with the Globe and Mail, Ganenthiran said the company could take a business growing at 25% profit margins to about 30% growth and 30% profit margins within a year.
“Over the past year and a half, we have seen that the need for technology on Main Street is only going to grow,” Ganenthiran said. “The best way to get innovative technology into the hands of real customers is to work with established companies that customers already trust.”
Ganenthiran added that the new funding will help Beacon partner with more founders, acquire additional businesses, and expand the AI-driven technology platform that supports them. The goal is to bridge the gap between AI-driven technology and real-world industry, he said.
Beacon’s investors (including commercial bank BDT & MSD Partners and Fidji Simo, former CEO of Instacart and incoming applications CEO of OpenAI) are active AI backers.
The majority of investors are U.S. or global companies, reflecting the challenges Canadian entrepreneurs often face in accessing capital, Ganenthiran said.
“As a proud Canadian, we need to do a better job of ensuring that significant funding is available to entrepreneurs who are going to build great technology,” Ganenthiran said.
Beacon’s rollup strategy is similar to Canadian companies like Constellation Software, which has acquired more than 1,000 small software companies serving niche businesses. Constellation, a publicly traded company, has seen its stock price fall recently due to concerns that it is falling behind in the AI race.
