Vancouver-based startup Sanctuary AI is raising more money as it tries to develop humanoid robots powered by artificial intelligence, The Logic has learned.

In a Jan. 10 email to investors, chief financial officer Philip Smith wrote that the company was “undertaking a US$10 million convertible note offering in order to finance the company for fiscal 2025.” Sanctuary had found takers for 50 per cent of the offering, according to the email, and was asking existing shareholders to take the balance. The company hopes to close the offering by Feb. 28.

The company will combine the money it raises from the offering with its existing cash position and “other financing sources,” Smith wrote, which will “allow the company to achieve key technological and commercial milestones this year.”

Sanctuary is trying to create what it claims would be the world’s first “human-like” intelligence in robots. In December it released new “tactile sensor technology,” which lets robots use sensors to better grasp surfaces.

Sanctuary’s focus this year is on what Smith called its “core assets”: artificial intelligence, robotic hands and intellectual property tied to “embodied AI,” or autonomous beings that use AI, like humanoid robots.

“The highest value in humanoids is found in high performance models (which can complete commercial tasks) and dexterous hardware. This is where we are focusing our efforts,” Smith added.

Smith, along with board member Martin Reed and CEO James Wells, did not respond to The Logic’s request for comment by deadline. 

Sanctuary struck a partnership last year with Magna International that would see the auto-parts giant, which produces components for automakers including Toyota, BMW and Mercedes-Benz, use Sanctuary’s Phoenix robots in its factories. Via its venture capital arm, Magna also invested in the US$58.5 million Series A round Sanctuary raised in March 2022, along with Bell and Verizon Ventures, among others. As of July 2024, when it announced funding from BDC Capital’s Thrive Venture Fund and InBC Investment Corp., Sanctuary had raised over $140 million in funding since its 2018 founding.

Investors in Sanctuary AI previously told The Logic they were worried about the company’s ability to fundraise in a competitive industry. One investor was concerned that robotics companies generally will have trouble raising capital over the next few years, and another worried about Sanctuary’s chances against its U.S. peers. 

In November, Sanctuary’s board ousted Geordie Rose, the company’s CEO and one of its co-founders, replacing him with Wells, who had been the company’s chief commercial officer. Co-founder Suzanne Gildert had already left the company in April 2024. Sanctuary laid off more than 30 employees around the time Rose was pushed out. 

The US$10 million note offering has a two-year term, and is convertible into preferred shares at a 20 per cent discount to the company’s next priced equity financing, according to Smith’s email. If the company is acquired while the note is outstanding, investors will receive two and a half times the value of their note. 

Investors will also receive a warrant to acquire additional shares in the company, the email said.