Toronto-based startup Modem has successfully secured $4.4 million USD ($6 million CAD) in an equity pre-seed funding round, led by Silicon Valley venture capital firm Accel. The round saw participation from Montréal’s Inovia Capital and notable angel investors, including Ivan Zhang, co-founder of Cohere, and David Cramer and Chris Jennings, co-founders of Sentry, where Modem’s founder, Ben Vinegar, previously served as vice president of engineering.
Founded in May 2022, Modem addresses a significant issue in software development: the difficulty of managing an overwhelming amount of information, a challenge that has intensified with the advent of large-language models (LLMs). Vinegar’s experience with developer bottlenecks positions him well to understand these challenges. “Getting user feedback to developers is like a ‘game of telephone,’” he remarked. “By the time it reaches you, you’re already getting a mutated version of what’s true.”
Modem aims to streamline product management workflows by integrating with existing software platforms. The platform proactively flags bugs, curates support tickets, and follows up with customers post-software updates. Additionally, it can respond to natural language questions such as, “What are the biggest issues my customers are facing?” This functionality positions Modem alongside other AI-driven tools designed to enhance developer productivity.
Investors are increasingly turning their attention to AI-focused startups like Modem as they capture a growing share of the Canadian software market. Taha Mubashir, a partner at Inovia Capital, noted, “We’ve seen firsthand how AI-powered coding tools have transformed developer productivity. Ben had a similar insight—an AI that does for product teams what coding agents do for engineers.”
Modem has found traction with small developer teams also leveraging AI in their operations. The startup operates on a subscription model, with pricing influenced by data usage, a strategy inspired by leading AI products in the market. However, despite the advancements that AI tools have ushered in, productivity gains among developers have been uneven. A January study by the Complexity Science Hub found that generative AI tools increased productivity among programmers by four percent on average, with senior developers benefiting the most. Conversely, a July 2025 study by research nonprofit METR indicated that experienced developers took longer to complete tasks when utilizing AI tools, often believing they were working more efficiently.
Despite spending time in California during his tenure at Sentry, Vinegar returned to Canada during the COVID-19 pandemic to launch Modem from home. He emphasized that while San Francisco remains a prominent tech hub, Toronto and Canada have unique advantages, particularly in talent. Vinegar reflected on Sentry’s past hiring practices, stating, “We participated in the ‘brain drain’ by hiring Canadian talent down south.”
The discussion around location has recently gained attention in Canadian tech, especially after Y Combinator briefly removed Canada from its list of investable regions before reinstating it a week later. Vinegar believes that a crucial lesson for Canada lies in fostering a stronger sense of community among tech companies. “Even though some are competing, they are kind of on the same team,” he noted. He believes that if Canadian companies become more proactive in purchasing each other’s products, it could create a more collaborative environment.
As Modem continues to gain momentum, its trajectory reflects broader trends in the tech industry, particularly the increasing reliance on AI tools to enhance productivity and streamline workflows. With the ongoing evolution of software development practices, the importance of effective communication and context management within teams remains paramount. The success of startups like Modem may signal a shift in how product management is approached in the era of AI.
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