Dartmouth-based AI company Arken Innovations has received a round of investment from MaxWave Capital Inc., cementing a relationship in which the Arken technology will be used across the MaxWave portfolio of companies.

Founded by serial entrepreneur Sam Sanandaji, Arken has developed a product called the Knowledge Fusion Engine, which employs artificial intelligence to help clients in regulated industries make crucial decisions. It bases these decisions on a closed universe of data so that the user knows that the decision-making process has not been corrupted by extraneous information floating around on the web or in the cloud. It will only make a decision if it has all the validated data at hand.

"In the industries we serve — maritime, defence, healthcare, legal — a wrong answer isn't a bad user experience,” said Sanandaji in a statement announcing the investment. “It's a grounded vessel, a missed compliance window, a patient harmed. Most AI platforms will give you an answer. ARKEN is built to know when not to.”

The investment is not a traditional venture capital round because MaxWave is neither a VC nor a traditional private equity company. Rather it is an “independent sponsor”, a class of investment vehicle that gathers and deploys capital on a deal-by-deal basis rather than building a fund that invests in many companies. What’s more, MaxWave is an activist fund so that it embeds its own “operators” in its portfolio companies so they act as senior management.

MaxWave has made three investments in the past two years, but the Arken investment is the first that it’s announced publicly. It timed the announcement to coincide with the Invest Canada 2026 conference taking place in Halifax this week.

For the Arken deal, MaxWave chose its principal George Palikaras, the former founder and CEO of Meta Materials, to join the management team of the target company. Palikaras serves as the company’s President and COO, while Sanandaji, who previously co-founded Halifax-based Modest Tree, serves as Arken’s CEO. Arken is now based at the COVE facility in Dartmouth. 

MaxWave, which is not revealing the size of the investment, has been working with Arken for more than a year and has invested in the company through a series of tranches.

The investment firm was impressed by Sanandaji’s technology, which is different from many AI products because it does not answer questions based on information gleaned from nebulous sources. The Knowledge Fusion Engine helps users arrive at important decisions based on a specific set of data determined by the governance of the company. The information used in making the decisions can be traced and measured by the system.

Dr. Peter J. Balafas, Managing Partner, MaxWave Capital, said in an interview the technology also has the ability to capture the knowledge of senior executives ensuring it remains with the company if they leave. That’s vital in today’s business climate because so many senior people are nearing retirement age.

MaxWave generally invests in companies with an enterprise value (the total value of equity and debt) of $50 million to $800 million with a strong focus on the Canadian market. Balafas admitted that Arken is smaller than its target but MaxWave did the deal anyway because it was a strategic investment.

Arken and MaxWave have built a symbiotic relationship that extends beyond the traditional interaction between an investor and its portfolio company. The other companies MaxWave has invested in (and will invest in) will use the Arken technology to ensure they make the best decisions on crucial issues. MaxWave itself, will also use the Knowledge Fusion Engine in its own investment decisions.

“Private equity has traditionally relied on experience, pattern recognition, and operational playbooks,” said Balafas. “What ARKEN enables is the institutionalization of decision-making itself — not as a concept, but as deployable infrastructure.”