Toronto-based programmatic advertising startup StackAdapt has announced a major funding round, securing $235 million in equity funding led by Teachers' Venture Growth (TVG), the investment arm of the Ontario Teachers' Pension Plan. This significant investment is a testament to the company's growth and potential in the AI-driven advertising space.

The funding round, which also includes participation from Intrepid Growth Partners and four other unnamed investors, is notable not only for its size but also for its focus on AI-driven solutions. StackAdapt, which describes itself as a company that "harnesses the power of AI," is well-positioned to capitalize on the growing trend of AI adoption in the advertising industry.

In the context of Canadian startup funding, this round is significant. While the total number of deals in 2024 was down from the previous year, companies working in the area of artificial intelligence, such as StackAdapt, are taking an outsized share of investments. This trend mirrors what is happening in other markets, with AI-driven startups gaining traction.

StackAdapt, founded in 2014, had previously operated as a bootstrapped company until 2022, when it received a $300 million investment from Summit Partners. According to PitchBook data, at least some of that investment was in the form of a secondary investment, which would put the company's valuation at above $600 million. The company is not disclosing its valuation with this current round.

The programmatic advertising space, which StackAdapt operates in, has become the building block of digital advertising, accounting for upwards of 90% of the market. This is due to its ability to provide marketers with a more effective way of measuring ad performance and targeting, as well as giving publishers a more automated way of bringing in a larger volume of ads against their content. StackAdapt's inventory includes native advertising, display, video, connected TV, audio, games, and more, catering to customers across various business verticals.

However, the rise of AI and automation in programmatic advertising has also introduced challenges, such as ad fraud and difficulties in controlling brand safety and data protection. StackAdapt's CEO, Vitaly Pecherskiy, acknowledges these challenges but also sees opportunities for companies like his to drive growth through automation and AI. "Companies are looking for solutions to drive their business forward while prioritizing cost-effectiveness through automation and AI," he said in a statement.

StackAdapt's AI technology, built on a decade of experience analyzing ad traffic patterns, is designed to combat ad fraud and bot traffic. The company's focus on AI-driven solutions has impressed investors, including Rick Prostko, senior managing director of TVG, who praised StackAdapt's "exceptional team, visionary leadership, and relentless focus on delivering customer value."

This funding round marks a significant milestone for StackAdapt, as it looks to continue its growth trajectory and solidify its position as a leader in AI-driven, end-to-end advertising. With local backing from TVG and other investors, the company is well-positioned to capitalize on the growing demand for AI-driven advertising solutions.