> An internal communique obtained by the Globe stated “there were no roles for the vast majority” of workers in corporate functions already filled by ServiceNow. Element AI also told employees their stock options are “void and cancelled...with no value in lieu provided” in the deal.
Elsewhere in the article, it mentions that all investors were paid out. Startups have no credibility anymore to potential employees
>Elsewhere in the article, it mentions that all investors were paid out. Startups have no credibility anymore to potential employees
I've been part of two startup acquisitions and the net value of my options (over 1% of the company in one case) was $0. Join a startup for the experience and the ability to have more influence, not for getting rich.
> Startups have no credibility anymore to potential employees
Startups that have zero revenue and jacked up to their tits with investor money should have no credibility.
Element.ai was in toronto and it was the talk of the town of the amount of funding they got with almost no revenue. And no one exactly knew what they were doing.
Their investors got the short end of the stick. Unfortunately its a human behavior that the most loud mouthed charismatic people will get the grease and will be funded while thousands of more deserving startups with real revenues and business models will die in a ditch due to lack of funding.
One of Montreal's flagship artificial intelligence companies, Element AI, co-founded in 2016 by Yoshua Bengio and in serious financial trouble, was acquired by a California software firm, ServiceNow.
Published on November 30, 2020 at 9:31 am Updated at 12:13 pmShare
Karim BenessaiehKARIM BENESSAIEH
THE PRESS
It's a tragedy," said Louis Têtu, President and Founder of COVEO and Vice-Chairman of the Board of Directors of the Canadian Council of Innovators, which brings together 133 Canadian companies, some 20 of which are based in Quebec. We have just sold a block of strategic talent and intellectual property in a sector where there are many economic levers. I am outraged. »
The transaction, of an amount that has not been confirmed, but which would be around US$400 million, according to two sources, is expected to be completed "in early 2021", according to a press release issued Monday morning. By 2019, Element AI had succeeded in raising more than $200 million with the support of new investors, including the Caisse de dépôt et placement du Québec (CDPQ) and the Quebec government. According to an estimate by the specialized site TechCrunch, this fundraising effort gave the Montreal-based firm a value of between CDN$800 million and CDN$930 million.
This acquisition, ServiceNow's fourth in 2020, would be the largest ever made by the company, which has a market value of US$103 billion. In an interview with La Presse, ServiceNow's General Manager for the Canadian market, Marc LeCuyer, assured that two of Element AI's co-founders, CEO Jean-François Gagné and researcher Yoshua Bengio, would "stay on board". Montreal operations will continue with Element AI's half a thousand employees.
The Montreal-based company's business model, which will be integrated into ServiceNow, will be completely changed, he said. Our type of acquisition is that we take a company and rebuild it," said LeCuyer. That's what we're doing here, and it will allow us to integrate a large team of data scientists and artificial intelligence experts. »
No warranty
For the Minister of Economy and Innovation Pierre Fitzgibbon, it is "disappointing" that Element AI could not remain Quebec-owned, a failure he attributes to the fact that "it failed to deliver its business plan". He recalled that Quebec City came to the company's rescue in 2019 with a $25 million investment, only half of which has been disbursed to date. "In the transaction, this amount will be taken back, there will be no loss for the government," he said.
"Under the circumstances, he said, it is good news that outsiders are valuing the talent that we have been able to stimulate in Quebec. "Element AI will no longer have several clients, but only one who is determined that it will be their development center for artificial intelligence. "While ServiceNow has given assurances that the Montreal operations will be preserved, there is no guarantee of that. "That's their intention, but we can't ask for a guarantee, we're not shareholders. »
As for the CDPQ, spokesperson Maxime Chagnon believes that "the only possible outcome for Element AI was to find a strategic partnership that will allow it to continue its activities. As of December 31, 2019, the Caisse owned between $30 million and $50 million of the company's capital, which would not technically allow it to block a transaction. We are acting in the interests of our depositors," Mr. Chagnon added. We had provided Element AI with intensive support in recent years. ServiceNow is a much broader platform that will strengthen Element AI in its growth, which is good news for this key sector. »
New crossroads of AI
The financial setbacks have been known for more than two years. Several media reports had raised doubts about the management of the company, which has half a thousand employees, but would only have revenues of $10 million in 2018, acc...
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[ 2.2 ms ] story [ 33.9 ms ] threadElsewhere in the article, it mentions that all investors were paid out. Startups have no credibility anymore to potential employees
This sounds like a pure acqui-hire for the Montreal team. I'm curious how much ServiceNow stocks the employees will get as part of the deal.
I've been part of two startup acquisitions and the net value of my options (over 1% of the company in one case) was $0. Join a startup for the experience and the ability to have more influence, not for getting rich.
Startups that have zero revenue and jacked up to their tits with investor money should have no credibility. Element.ai was in toronto and it was the talk of the town of the amount of funding they got with almost no revenue. And no one exactly knew what they were doing.
Their investors got the short end of the stick. Unfortunately its a human behavior that the most loud mouthed charismatic people will get the grease and will be funded while thousands of more deserving startups with real revenues and business models will die in a ditch due to lack of funding.
https://www.lapresse.ca/affaires/entreprises/2020-11-30/elem...
Surely JF Gagné will be given gardening leave after this fiasco.
One of Montreal's flagship artificial intelligence companies, Element AI, co-founded in 2016 by Yoshua Bengio and in serious financial trouble, was acquired by a California software firm, ServiceNow.
Published on November 30, 2020 at 9:31 am Updated at 12:13 pmShare Karim BenessaiehKARIM BENESSAIEH THE PRESS
It's a tragedy," said Louis Têtu, President and Founder of COVEO and Vice-Chairman of the Board of Directors of the Canadian Council of Innovators, which brings together 133 Canadian companies, some 20 of which are based in Quebec. We have just sold a block of strategic talent and intellectual property in a sector where there are many economic levers. I am outraged. »
The transaction, of an amount that has not been confirmed, but which would be around US$400 million, according to two sources, is expected to be completed "in early 2021", according to a press release issued Monday morning. By 2019, Element AI had succeeded in raising more than $200 million with the support of new investors, including the Caisse de dépôt et placement du Québec (CDPQ) and the Quebec government. According to an estimate by the specialized site TechCrunch, this fundraising effort gave the Montreal-based firm a value of between CDN$800 million and CDN$930 million.
This acquisition, ServiceNow's fourth in 2020, would be the largest ever made by the company, which has a market value of US$103 billion. In an interview with La Presse, ServiceNow's General Manager for the Canadian market, Marc LeCuyer, assured that two of Element AI's co-founders, CEO Jean-François Gagné and researcher Yoshua Bengio, would "stay on board". Montreal operations will continue with Element AI's half a thousand employees.
The Montreal-based company's business model, which will be integrated into ServiceNow, will be completely changed, he said. Our type of acquisition is that we take a company and rebuild it," said LeCuyer. That's what we're doing here, and it will allow us to integrate a large team of data scientists and artificial intelligence experts. »
No warranty For the Minister of Economy and Innovation Pierre Fitzgibbon, it is "disappointing" that Element AI could not remain Quebec-owned, a failure he attributes to the fact that "it failed to deliver its business plan". He recalled that Quebec City came to the company's rescue in 2019 with a $25 million investment, only half of which has been disbursed to date. "In the transaction, this amount will be taken back, there will be no loss for the government," he said.
"Under the circumstances, he said, it is good news that outsiders are valuing the talent that we have been able to stimulate in Quebec. "Element AI will no longer have several clients, but only one who is determined that it will be their development center for artificial intelligence. "While ServiceNow has given assurances that the Montreal operations will be preserved, there is no guarantee of that. "That's their intention, but we can't ask for a guarantee, we're not shareholders. »
As for the CDPQ, spokesperson Maxime Chagnon believes that "the only possible outcome for Element AI was to find a strategic partnership that will allow it to continue its activities. As of December 31, 2019, the Caisse owned between $30 million and $50 million of the company's capital, which would not technically allow it to block a transaction. We are acting in the interests of our depositors," Mr. Chagnon added. We had provided Element AI with intensive support in recent years. ServiceNow is a much broader platform that will strengthen Element AI in its growth, which is good news for this key sector. »
New crossroads of AI The financial setbacks have been known for more than two years. Several media reports had raised doubts about the management of the company, which has half a thousand employees, but would only have revenues of $10 million in 2018, acc...