California-based software company ServiceNow has officially acquired Element AI for “approximately” $230 million USD. The previously announced transaction closed on January 8, SEC filings confirm.
Element AI positioned itself as a global leader in AI, but faced difficulty getting its products to market.
Under the terms of the deal, ServiceNow has acquired all issued and outstanding equity interests of Element AI, which was founded in 2016 by CEO Jean-Francois Gagné, Anne Martel, Nicolas Chapados, Jean-Sebastien Cournoyer, Philippe Beaudoin, and the “godfather” of machine learning Yoshua Bengio. The approximate $230 million price tag is subject to customary purchase price adjustments.
The purchase price represents a significant departure compared to Element AI’s estimated $600 million to $700 million valuation in September 2019 following its $200 million CAD Series B round.
The Canadian tech startup positioned itself as a global leader in artificial intelligence (AI), promoting ethical AI internationally, but faced difficulty getting its products to market. In 2019, it was reported the company faced high operational costs, minimal revenue, and setbacks on the development of two of its flagship products, causing it to lay off staff.
In a 2019 interview with BetaKit, Gagné discussed the difficulty the company has had with commercialization, partners not using their data efficiently, the lack of existing infrastructure to scale an AI model, and intellectual property.
It had originally been expected that ServiceNow would retain “most” of Element AI’s technical talent while also “winding down” the company’s existing business following its integration with ServiceNow. Following the announcement of the initial acquisition deal, The Globe and Mail reported an undisclosed number of Element AI employees received termination notices, including the “vast majority” of corporate employees. At the time, Marc LeCuyer, ServiceNow’s general manager of Canada refused to disclose the number of Element AI employees that were set to join ServiceNow to BetaKit.
The acquisition also led to the termination of a funding agreement between the Government of Canada and Element AI that had been made earlier in 2020.
ServiceNow has announced plans to create an AI innovation hub in Canada to “accelerate customer-focused AI innovation” on the company’s Now platform.
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