US firm Forum Ventures bets on Toronto to build next wave of AI software startups

Amid the artificial intelligence (AI) boom, American venture capital (VC) firm Forum Ventures decided to take a more active role in building the next wave of North American AI software startups by establishing a venture studio in Toronto in 2023.

Forum chose Toronto given the growth of the city’s tech ecosystem, its high talent density, and its lack of “early-stage, true risk capital.”

Since then, the early-stage investor has secured $21.5 million USD ($30.2 million CAD) across two funds to support this strategy, and launched 17 of a planned 30 startups. On the heels of the final close of its second fund, BetaKit sat down with Forum CEO and managing partner Michael Cardamone and partner Jonah Midanik for an exclusive interview on why the United States VC firm decided to build an AI-focused venture studio north of the border.

Cardamone and Midanik said Forum chose Toronto for this initiative because of the growth of the city’s tech ecosystem, its high talent density, and its lack of “early-stage, true risk capital.”

Midanik said Forum, which is headquartered in New York and also has a presence in San Francisco, saw a chance to bring more “pre-revenue, pre-product” investing and access to US VC networks to Toronto.

Forum began building this AI venture studio with a $10-million USD ($14-million CAD) initial “test fund” in 2023. That fund’s early results led Forum to close a new, $11.5-million USD ($16.1-million CAD) successor this year to continue the same strategy.

The VC firm second AI studio fund’s limited partners consist largely of existing Forum investors, including anchor Right Side Capital Management, as well as undisclosed family offices, high-net-worth individuals, and tech entrepreneurs and operators.

Forum, which initially got its start in San Francisco as Acceleprise, has been investing in early-stage, business-to-business (B2B) software-as-a-service (SaaS) startups since 2014. The VC firm has backed over 500 B2B SaaS businesses that have gone on to raise more than $1 billion USD ($1.4 billion CAD) in follow-on funding during this time. Today, Forum has more than $125 million USD (nearly $175 million CAD) in total assets under management.

The venture studio applies Forum’s existing model to startups at inception and complements its existing Accelerator program, which is currently on its $22-million USD ($31-million CAD) sixth fund, and its third pre-seed fund, for which it is still fundraising but expects to be comparably sized.

Cardamone said that Forum’s AI venture studio lets it go even earlier at a time when multi-stage investors are increasingly creeping up the stack due to increased competition at later stages.

Forum believes that the tech market is in the midst of “a platform shift” as AI changes how B2B SaaS solutions are built, sold, and adopted. The VC firm is betting that by providing early capital and the right support in exchange for a greater equity stake, it can tip the scales, de-risk, and accelerate the growth of more nascent B2B SaaS startups with AI “at the core.”

Through this AI Studio, Forum invests $250,000 USD ($350,000 CAD) in startups at formation, allowing founders to retain majority ownership and board control as it seeks to serve as “a hands-on co-builder, not a controller.”

“Not every studio adheres to that model, and what we find is the biggest thing founders want—especially repeat founders—is they want control of their own business,” Midanik said.

Forum partners with domain experts—often repeat founders—to launch AI-native, B2B SaaS companies in sectors like vertical and agentic AI, FinTech, advanced manufacturing, healthcare, and AI infrastructure. Portfolio companies receive go-to-market, engineering, product, design, finance, fundraising, human resources, and recruiting help from Forum’s platform team, plus access to the network of VCs that it has cultivated over the past decade.

According to Midanik, this approach has been working thus far, as 63 percent of Forum’s AI studio portfolio startups have raised follow-on capital within 12 months of formation, beating the firm’s historic average of less than 50 percent over 18 months.

Midanik, who previously founded and led Toronto marketing tech startup Limelight Platform, and met Forum through its investment in his company, has been leading the deployment of Forum’s AI Studio funds in Toronto, where 12 of the venture studio’s 15 employees are located. Nearly half of the VC firm’s overall workforce is now based in Canada.

Midanik said that, for the past five years, Forum has backed more than 15 Canadian startups each year across its funds—a pace he expects the VC firm to continue going forward with the help of its latest AI Studio fund. Forum’s AI studio has co-launched three Canadian companies so far, including Toronto-based enterprise AI deployment platform Identity Machines. Midanik expects it to help build at least another three, possibly more, through its latest fund.

Feature image courtesy Forum Ventures.