Last Updated on August 1, 2025 by BusinAssist Editorial Team
When many people hear of Artificial Intelligence (AI), their minds go to ChatGPT. While this was the first thing we were introduced to after the innovation of AI, the technology has advanced, creating many platforms that help in every aspect of our lives.
For starters, AI has transformed the market landscape, with companies leveraging it to enhance the effectiveness of their business operations. In Canada, businesses are using AI, which is innovating their operations and positioning them strategically in the market.
According to reports, AI is expected to improve the economy by over a billion dollars, helping entrepreneurs in Canada tap into innovation to boost their startup’s position in the marketplace.
What is stopping you from building your AI startup through Canada company incorporation? This article explores how AI is reshaping Canadian business and where the biggest opportunities lie for startups.
Key Takeaways
- AI is transforming Canadian industries, driving innovation and startup efficiency.
- Canada’s strong AI ecosystem supports growth through research, funding, and policy.
- Startups face hurdles like data access, commercialization, and regulations.
- Despite challenges, AI offers high potential for startups with support like BusinAssist.
Why is AI gaining momentum in Canada?
Canada is known to have world-class AI research institutes helping many entrepreneurs commercialise the applications to grow their businesses. Here is a breakdown of the reasons behind AI’s momentum in Canada;
Government support: The government has supported AI since it was first introduced. It was the first country to launch an AI strategy in 2017 and the government has committed more than $16 billion to its development.
With government support, Canada has seen the creation of AI research institutes such as
- Vector Institute (Toronto)
- MILA – Quebec AI Institute (Montreal)
- Amii – Alberta Machine Intelligence Institute (Edmonton)
Top-tier research institutes: As mentioned above, Canada has world-class AI research institutes that work closely with startups and enterprises to help them use AI to innovate their business. These universities like the University of Toronto, McGill, the University of Montreal, Waterloo, and the University of Alberta produce highly skilled AI graduates.
Startup ecosystem: The AI community is very strong in Canada’s startup domain.
Creative Destruction Lab, Next AI, and MaRS Discovery District assist builders of AI companies in the early stages.
Early investments provided by the government make it easier to conduct experiments.
Connecting academic institutions with both startups and large companies is regarded as useful.
Knowledge about data privacy and policies: Since Canada has PIPEDA and is preparing AI and Data Acts, businesses in Canada must consider the privacy of their users when creating AI.
Startups that manage to be innovative within these limitations gain a benefit.
Global trends related to ethical AI for Canada: It is involved in the Global Partnership on AI (GPAI) and is taking part in designing international AI guidelines.
With ethics at the center, startups now have chances to make their AI systems honest, open, and understandable.
Which industries are being shifted by AI?
Healthcare industry
The role of healthcare now includes using AI for making diagnoses, designing drugs, and dealing with paperwork. Using AI, doctors can diagnose patients faster, develop new drugs more efficiently, and give each patient the appropriate care with personalized plans.
Such bots and assistants can share details with patients, organise appointments, and share basic medical tips.
These tools enable healthcare providers to remotely check patients’ vital signs and provide help if required.
Financial services
AI is used by financial services to make daily processes more efficient, control risk, and boost customer satisfaction. Using AI technology, businesses can automatically handle tasks, review a lot of data, and make services more individual, which leads to saving money, improved decision-making, and higher income.
Having strong IT policies can help an organization improve how it handles risks.
Fraud detection
These tools will check data on transactions to identify and stop any fraud as it happens.
AI improves the process of credit risk assessment by analyzing lots of data, which makes sure fewer loans get defaulted and the risk is low. In addition, using the information allows investors to analyze current and possible risks connected to their investments.
Manufacturing and the supply chain
AI supports finding current market trends and many factors involved in the manufacturing and supply chain. Because of smart systems, manufacturers can properly manage their supplies and cut expenses. Using AI in demand forecasting makes it possible to produce items when required, lowering waste and ensuring businesses have enough stock at hand. It automatically uses the new data it is given to make better predictions and change with the changes in the market.
E-commerce and retail industry
These days, people prefer shopping online more than from stores. Platforms like Shopify include bots that assist with customers and sales. Automation of sales is possible for retailers, without them needing to move to Canada. Because of AI being used, Canadian retailers made over 750 billion sales in 2023, more than they achieved in 2022. There will be growth throughout 2024, and it is also expected to go up in 2025.
Agriculture
The GDP of Canada is significantly boosted by the agricultural sector, which contributes a lot of money every year. The use of AI-driven approaches in farming allows Canadian farmers to utilize everything efficiently, overcome risks, and reach better production levels.
With AI, farmers can decide on effective ways to take care of their crops. Tools that use AI review data from sensors and drones to ensure better results in farming.
Challenges Canadian startups face with AI
Problems with funding for growth
You can easily get early-stage AI funds through grants and seed funding, however, it is more challenging to get investment money in Canada than it is elsewhere.
More often than not, U.S. investors can choose to invest but they will need to relocate or transfer IP to the United States.
Traditional VCs may avoid investing in developing a product when it takes a lot of money and time.
Ability to obtain quality data
While AI requires big and well-sorted datasets, many startups still struggle to provide them.
They do not have access to the necessary data because they are not big enough or have not formed necessary partnerships. Additionally, they must follow privacy rules (PIPEDA, provincial ones) that decide which data can be saved and accessed.
In most cases, sharing data with enterprises and public institutions takes time, is complicated, or cannot be done.
Commercialising new technology is often tougher than research
Even though Canada does well in AI research, last year showed it has difficulties changing that research into products for the market.
Usually, people with academic expertise remain in research rather than working in startups.
Founders may focus on technology rather than making sure the company solves a real market challenge.
Connecting research at laboratories with products in the market is still a difficult task to date.
Regulatory uncertainty
There are stricter laws when dealing with AI, with the Artificial Intelligence and Data Act (AIDA) being one of them.
Founders of startups can be confronted by the possibility of not complying with standards and incur more costs related to the judicial system.
Delayed entrances of products into the market
If the rules are not clearly defined, it may stop people from taking risks or adopting new ideas.
AI’s difficulties have not stopped it from creating new approaches to doing business and helping startups to be recognized. As a result, Canada’s economy is increasing as efficiency and optimization help make things easier.
By having so many benefits, you can start your Canada business from any place in Canada. Company formation agents like BusinAssist help you incorporate a company in Canada efficiently.
Contact us for more information at info@businassist.com.
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Joy is a content writer at BusinAssist with 6+ years of experience in content marketing and social media strategy. She specialises in company formation and virtual operations, guiding entrepreneurs through global markets with clarity, drawing on her marketing and PR background. Business Assist with BusinAssist – your business success partner.