TORONTO
Toronto-based artificial intelligence software company Blue J Legal Inc. has raised US$176 million in a new funding round that values the firm at US$700 million.
The Series E financing was led by Baltimore-based investment firm JMI Equity, with participation from existing investors Oak HC/FT, Sapphire Ventures and Intrepid Growth Partners.
"We can now confidently deliver an answer to just about any tax research question," said Benjamin Alarie, CEO and co-founder of Blue J.
The company, a University of Toronto spinout founded in 2015, develops AI software to help tax accountants and lawyers research complex taxation matters. It plans to use the proceeds to commercialize a new agentic product and expand into the United Kingdom.
Nearly US$100 million of the new capital will be used to buy shares from employees and early investors, with about US$80 million going to the company for growth initiatives.
The investment comes about 15 months after Blue J secured US$122 million in a Series D round in the summer of 2025. The company said its annual recurring revenue has grown by 165 percent since that last financing and is now in the mid-eight-figure range.
Jack Duane, a principal at JMI Equity, said his firm tracked Blue J for years and received "resounding positive sentiment" from its customers. "What came through clearly is they are a trusted AI vendor in a space where trust is of the utmost performance," Duane said.
He added that Blue J's offering is "extremely hard to replicate" due to its access to proprietary tax data and unique domain expertise.
The company rebuilt its core product after the launch of OpenAI's ChatGPT in late 2022, incorporating large language models. While an initial relaunch in mid-2023 produced answers that were wrong about half the time, the company refined the software by licensing data from publishers like Tax Notes.
By the end of 2024, Blue J could produce answers within 10 seconds that were more than 95 percent accurate. Alarie said error rates have since fallen by about 80 percent this year, with users now giving a "down vote" to generated answers only 0.05 percent of the time.
Client growth has accelerated, with the number of firms using Blue J's platform rising from less than 100 three years ago to more than 6,500 today. The company has doubled its staff over the past year and aims to exceed 200 employees by the end of 2026, with most hiring concentrated in Toronto.
Blue J is close to launching new workflow tools that will expand its utility beyond answering tax questions. The agentic offerings will automatically draft memos, notices of assessment and responses to tax authorities based on its research.
"Blue J will be increasingly capable of assisting with just about any of those advisory workflows for which research is an essential input," Alarie said.
The company also plans to open an office in the U.K., where its platform already covers British tax laws. Its services currently cover federal, state and local tax systems in the United States, as well as Canada and the U.K.
As part of the funding round, Jack Duane of JMI Equity will join Blue J's board of directors. JMI's other Canadian investments include stakes in Clio, PointClickCare, Jane, Safe Software and Benevity.
Blue J was founded by University of Toronto professors Benjamin Alarie, Albert Yoon and Anthony Niblett, along with Brett Jansen. Individual plans for its software start at US$1,498 per year.
This story was written by the e2gold.ca newsroom from reporting by The Globe and Mail and arabcanadanews.ca. Quotes are checked word for word against that reporting.