June had barely started when word began to circulate that Toronto-based Blue J was considering a Series D raise.
For the scale-up, which offers a generative AI-powered research solution for accounting firms and tax professionals, the early chatter drew more investor calls than the team expected.
“Investors previously interested in ARR north of $5 million are now open to meeting $2 million to $3 million ARR businesses.”
“They were being chased left, right, and centre by investors,” said Daniel Lee, Managing Director in Technology and Innovation Investment Banking at CIBC Capital Markets
CIBC Capital Markets advised Blue J on the round, giving Lee a front row seat for the pace and frenzy surrounding one of the biggest Canadian AI deals of the year.
In parallel, Amy Olah—Managing Director and Head of Venture Banking at CIBC Innovation Banking—who works directly with high-growth AI founders as they scale, fund expansion, and navigate increasingly compressed fundraising timelines, has seen a drop in the ARR required to pique the interest of growth equity VCs.
“Investors previously interested in ARR north of $5 million are now open to meeting $2 million to $3 million ARR businesses.” says Olah.
“The velocity of capital raising itself is becoming a vote,” Lee added. “Founders who can really rapidly show not just technical progress, but customer proof points and rapid growth rates, really do unlock some outsized interest from investors.”
From these complementary vantage points—Capital Markets advising on financings and exits, and Innovation Banking providing direct capital—Lee and Olah are watching new patterns take hold with lessons for Canadian founders.
Depth is replacing breadth
Rather than building broad horizontal tools, the companies drawing sustained attention are embedding deeply into specific operational workflows, particularly in regulated or complex environments like legal and healthcare.
“Things are getting tighter and more niche and more sophisticated,” Olah said. “VCs like it better because that makes retention stronger.
Lee said Blue J’s hot raise is a good example of what investors are now looking for: deep involvement in customer workflows and a design that facilitates ongoing engagement. The tax platform allows its users to share its answers to complex tax questions, building virality as part of the product design.
This kind of design facilitates growth, user feedback, and built in distribution, allowing Blue J to become deeply entrenched and sticky with its users.
Lee shared that the most competitive AI-native products create an immediate “aha moment,” adding that investors are also looking for faster experimental and development cycles that create “growth loops.”
“When you get really good at that, you can drive product virality, and that growth just fuels itself,” he said.
Workflows in legal, healthcare, and other operational fields are producing stronger retention because the products understand the landscape in a way that general systems can’t. It’s this depth, Lee said, that’s also reshaping investor behaviour.
Olah agrees, and said it is now common to see winning companies build moats by embedding into highly specialized operational layers.
Investors are looking earlier
Last year was undoubtedly one of rapid growth for AI companies.
“For the most part, a lot of these AI companies that have crossed the $100 million ARR mark have all done so in less than three years.” Lee added. “If it was a SaaS company, it might’ve taken 10 years to get to $100 million in ARR.”
As a result, growth investors who once held themselves to strict thresholds for investment are moving up their timelines.
From Innovation Banking’s vantage point, there are practical consequences. Founders are expected to be better prepared sooner, with cleaner data rooms, clearer unit economics, and a sharper understanding of how capital will be deployed. Olah encourages founders to stay in market even when they are not actively raising: “I encourage a lot of these founders to take the time to be talking to investors,” she said. “If you can be organized and efficient around who you’re talking to and when, I think it’s a really smart way to ensure that when you’re ready to execute on your next round, you have everyone up to speed, and you actually know who would likely be the best fit.”
Lee agrees that companies attracting the biggest deals in AI today are the ones moving at a pace that would have seemed unrealistic only a few years ago.
“And so what we’re seeing in the market is that the next round often comes before the last round is even fully digested, and the valuation step ups are pretty significant,” said Lee. “The median step up in valuation between rounds that happen within 12 months, it’s 2 or 3X.”
Startups need to be ready
Companies that are doubling and tripling revenue in short windows need to support their growth while staying ahead of market momentum, which means in many cases, they raise before they strictly need to.
From Olah’s perspective, venture debt can be critical for AI companies managing rapid growth and valuation volatility. “Venture debt’s role continues to be a non-dilutive source of capital for these growing businesses,” she said. “I don’t think that will ever change, and it’s becoming more and more popular as founders and VCs are becoming more and more comfortable with it.”
In practice, venture debt is used to extend runway and reduce the pressure to raise prematurely. “Having that extra capital provides a measure of stability and optionality,” Olah said, “so you can keep your head down and do what you do best.”
On the advisory side, Lee emphasized discipline. When advising on high velocity AI deals, his team focuses on two roles. “One is to help management navigate and streamline the diligence process in order to convert as much investor interest into as many term sheets as possible,” he said. “And then two, to leverage those term sheets and drive the competitive tension that is going to be needed to minimize dilution, optimize the terms, and then, really importantly, increase the speed and certainty of close.”
Olah said she sees the distraction cost of a fundraise show up directly in company metrics. A tighter, more front-loaded process can reduce that risk, she noted, and helps founders keep executing while the round is underway.
As timelines continue to compress, Olah said selection discipline matters more for founders, not less: who matters more than how much. “Choosing the right VC is more important than the size of the cheque,” she said. “It can make a world of difference.”
Lee agreed that preparation is decisive. “Proper preparation and a streamlined process is really the key to converting that interest into cash in the bank on attractive terms and to avoid a loss of deal momentum,” he said.
Outlook to 2026
Looking into 2026, Lee and Olah expect liquidity to continue returning to the ecosystem, with more acquisitions and earlier exits beginning to surface.
“The liquidity window is reopening. As capital flows back to LPs through IPOs, M&A, and secondaries, funds can raise again and re-deploy. That cycle is setting up 2026 to be an active year for dealmaking,” Lee added.
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Feature image courtesy Pexels. Photo by Vlada Karpovich.