Silicon Valley software company ServiceNow (NYSE: NOW), a $100 billion American giant, has announced an agreement to acquire Montreal-based artificial intelligence pioneer Element AI. A statement from ServiceNow did not elaborate on terms of the deal, however TechCrunch has reported this morning that the transaction would be valued around USD 500 million.
This is considerably less than the USD 600 to 700 million valuation the company enjoyed when it raised its massive series B just over a year ago in September 2019.
In a statement, ServiceNow says that once the acquisition is complete, it will create an AI Innovation Hub in Canada to accelerate customer-focused AI innovation in its “Now Platform”, suggesting that this acquisition is also a commitment to the Canadian market. This follows similar investments by ServiceNow to create technology development centers in Chicago, San Diego and elsewhere. Montreal was not specifically mentioned as the location of the Canadian hub.
“Element AI’s vision has always been to redefine how companies use AI to help people work smarter,” said Element AI Founder and CEO, Jean-Francois Gagné. “ServiceNow is leading the workflow revolution and we are inspired by its purpose to make the world of work, work better for people. ServiceNow is the clear partner for us to apply our talent and technology to the most significant challenges facing the enterprise today.”
Gagné had been under fire for some time in certain circles. Criticized for taking years to get a product into the marketplace, and about a lack of transparency around exactly who Element AI’s customers are. He spoke publicly last fall about his company’s struggles in “operationalizing artificial intelligence”.
Over these past few years Element had made acquisitions, developed international partnerships and even opened offices in places like Toronto, London and elsewhere. At one point the company had grown to over 500 employees across the world.
The Tech Crunch story confirms ServiceNow is buying 100% of Element AI, and will be “winding down its existing business after integrating what it wants and needs”. It is clear that ServiceNow is looking to add different types of AI talent to its roster. However the report went on to say “Those who are not part of those teams will be supported with severance or assistance in looking for other jobs within ServiceNow”. Estimates indicate this could affect about half the organization.
That said, Gagné will be joining ServiceNow once the California giant completes the acquisition. The deal is expected to close early in 2021.