TORONTO — The federal government’s new national AI strategy, unveiled Thursday, promises to help more Canadian tech firms go global.

Montreal-based AI firm Coveo is already there. Right now, 97 per cent of its revenue comes from outside Canada. A top official at the Australian Taxation Office—which uses Coveo’s technology to help respond to tax questions—recently asked chair Louis Têtu whether the Canadian government was also a customer. “I would have loved to say, ‘Yes,’” he said, but Ottawa isn’t yet a major client.

That could soon change. Ottawa’s plan to bolster the success of Canadian technology firms abroad starts at home. In its AI strategy, the federal government has committed to buying from such companies itself and to simultaneously provide export support. It also aims to make Canada a source for the infrastructure and models that will power AI around the world, and a destination for the world’s top AI talent. 

Those are all tall tasks in a field currently dominated by the U.S. and China, and amid a frothy market where tech startups are constantly jostling for market share. 

As part of the strategy, the federal government is promising to be a “strategic anchor customer” for more Canadian scale-ups, giving them revenue as well as the “validation they need to successfully export their solutions globally.”

Tech executives say both the money and the endorsement of a public-sector contract can give a boost to growing firms. “All of this gets reinvested in stronger technology that makes us competitive,” said Têtu, who counts Dow, Manulife and SAP as customers.

Federal and provincial departments and agencies have historically failed to buy from, and sometimes even properly consider, homegrown suppliers, Têtu claimed. So he welcomed the strategy’s promises on procurement, although he said it could have done more to ensure foreign firms don’t reap all the profits from talent and intellectual property developed in Canada. In December, Coveo signed a non-binding agreement with the federal government to consider its AI tools for public service applications. 

Ottawa is also committing to source more of its AI processing power from Canadian providers and is exploring capacity purchases and direct funding to spur the building of large data centres across the country. AI infrastructure firms that take part in those projects can learn what large clients need, and prove themselves to potential foreign customers, according to Simon Ahdoot, CEO of Montreal-based Hypertec. “You build up capabilities by doing progressively larger deals,” he said—a 10-megawatt data centre project helps firms land a 50-megawatt one, then 100 megawatts and so on. 

The strategy also promises to put Canada’s diplomats and trade commissioners to work marketing the country’s AI firms internationally, and to open up sales opportunities for them via technology agreements with other countries. 

While the strategy doesn’t call out the U.S. or China by name, it makes several references to the need for Canada to reduce its dependence on and provide an alternative to “dominant” tech players. Prime Minister Mark Carney is seeking to lead a new trading and security alliance of middle powers, while AI Minister Evan Solomon has been signing digital deals with those same countries.

Canada plans to press its advantages, which are “everywhere from the energy infrastructure to a real expertise resident in some of our big companies,” Carney said Thursday in response to a question from The Logic. But he insisted Ottawa is not taking a “winner-take-all or challenge strategy,” citing co-operation with the U.S. on AI issues like the threat of advanced models. 

The federal government is particularly keen to help Canadian companies export so-called foundation models, the kind of multi-functional systems that power generative tools like ChatGPT and Claude. Canada is one of only four countries in the world where such models are being developed, Carney said on Thursday. 

Ottawa has already championed one of those developers, Cohere, with financing and contracts and by supporting its bid to expand in Europe via the acquisition of German AI startup Aleph Alpha. Cohere has positioned itself as an alternative for countries and firms seeking sovereignty because it gives customers control over the software it sells by running it on their own infrastructure. The firm is now also open-sourcing its models.

Most of the world has only experienced Silicon Valley’s approach to building and using technology, but there’s now an opportunity to change that, according to Cohere co-founder Nick Frosst. “Being a Canadian company selling abroad has been very useful right now,” he said, adding that lots of countries are looking for partners that “share their values and share how they think the technology should be deployed.” 

While many Canadian companies concentrate heavily on the U.S. market, Cohere has looked further afield and has won clients in Asia, Europe and the Middle East. “The Canadian tech ecosystem, over the next few decades, would benefit from being more global,” Frosst said. 

Hypertec is also feeling the international benefits of being Canadian. Its divisions operate, construct and sell critical hardware for data centres. Last June, it announced it will work with San Francisco-based cloud startup Together AI to set up two gigawatts of compute capacity in Europe; the project received a mention in the AI strategy.

Ahdoot said he’s been getting a warmer reception from potential European customers and partners over the past year. That’s partly down to Ottawa’s international “charm offensive,” he claimed. “It’s almost like the different ministers and the prime minister have been working in business development for Canadian companies as a whole.”

In an op-ed for the Toronto Star, Canadian Venture Capital and Private Equity Association CEO Benjamin Bergen wrote Ottawa can learn from the way the French government threw its support behind domestic model maker Mistral AI with funding, procurement and public appeals to use its technology.

Ottawa also hopes its new strategy can bolster the number of top AI researchers working in Canada. It aims to increase the number of AI chairs, which help AI institutes and schools pay for faculty and their labs, from 143 today to nearly 200.

“Canada is really well-known internationally for our research strength,” said Elissa Strome, executive director at non-profit CIFAR, which runs the chairs program. She added that expanding the number of positions sends “a very strong signal” to researchers that they should consider coming here.

Canada still has a way to go if it plans to be a leader in the new world of AI. The country currently ranks eighth on The Observer’s AI Index, which assesses nations based on innovation, implementation and investment. It’s behind dominant players, the U.S. and China, but also lags smaller economies like Singapore, South Korea and Israel. 

Canada’s score is weighed down by a lack of infrastructure and negative public attitudes to AI. The new strategy has ambitions to turn both around, but neither is likely to change quickly. In the meantime, AI firms can’t hang about waiting for Ottawa to help them sell abroad or buy from them, said Coveo’s Têtu. “We would be bankrupt if we had waited.”