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Paris-based artificial intelligence (AI) startup Mistral AI has raised €450 million ($487 million) in a new funding round, boosting its valuation to around $2 billion. Founded just over a year ago, the generative AI specialist has attracted major investors such as Nvidia and Salesforce with its open-source approach to developing powerful language models.
Andreessen Horowitz leads equity investments
The substantial financing package consists of more than €325 million in equity and €120 million in convertible debt. Venture capital firm Andreessen Horowitz is leading the equity investment, injecting €200 million into Mistral AI. Technology giants Nvidia and Salesforce agreed to provide the €120 million convertible debt financing.
Some details are subject to change, but documents show that Mistral’s three co-founders – Arthur Mensch, Timothée Lacroix and Guillaume Lample – will each sell more than €1 million worth of shares. Cédric O, former French minister and current chief advisor at Mistral AI, also plans to sell almost €1 million worth of shares.
Also read: xAI raises $1 billion in investments
Achieving a $2 billion valuation in record time
Reaching the $2 billion milestone within 18 months of inception underlines investor confidence in Mistral AI’s technology and approach. The startup focuses on open source software for chatbots and generative AI tools, which offer efficiency and sustainability benefits compared to proprietary models that require massive computing resources.
The valuation is also notable considering Mistral AI is based in Paris, while other leading AI players such as OpenAI and Anthropic come from the US technology ecosystem. It suggests that European startups can compete at the highest levels of generative AI, which only gained mainstream prominence after OpenAI unveiled ChatGPT in late 2022.
Mistral AI is emerging as a leading generative AI startup
Mistral AI aims to push the boundaries of fundamental AI models for reasoning and knowledge application. The founders have experience developing large language models similar to those of OpenAI and Meta AI.
The startup made waves when it launched in May 2022, raising a record funding round of $113 million – the highest ever in Europe for an AI company. That immediately put the valuation at $259 million.
In September, Mistral AI open sourced Mistral-7B, its 7 billion parameter language model. This model delivers state-of-the-art performance relative to its size, highlighting the efficiency gains provided by Mistral’s tailor-made training methodology.
Parallel development of commercial products
While Mistral AI is committed to open source foundations, it has also unveiled plans for proprietary commercial models optimized for private data and cloud deployment. The availability of both open and closed offerings meets customers’ diverse needs for privacy, security, and customization.
Mistral has not disclosed any details about potential commercial products. But the open source developments suggest that parallel private models could soon deliver additional breakthroughs in generative AI.
also read: What is OpenAI’s GPT Store?
Founders bring deep expertise in language models
Mistral AI’s co-founders borrow technical prowess from their previous roles working on large language models:
- Arthur Mensch – previously at Google DeepMind, where he contributed to models such as Gopher and Chinchilla.
- Timothy Lacroix – a former Meta AI researcher who was part of the team behind the OPT-175B and LLaMA language models.
- Guillaume Lample – another Meta AI alum who co-led work on models like BlenderBot 2.0.
These founders aim to match the capabilities of models from OpenAI and other US-based labs while minimizing resource usage through optimized model architectures. The initial results from Mistral-7B highlight their progress on this front so far.
Increase in European investments for AI startups
Mistral AI’s funding round comes along with a number of other notable fundings for European AI startups:
- German AI lab Aleph Alpha raised $500 million from investors like Jim Breyer.
- Anthropic selectively allowed investments in its Constitutional AI approach, including from UBS.
These deals indicate an intensification of competition among emerging players in the generative AI space – especially in the European startup ecosystem. After initial skepticism about AI’s potential business value, investors are now seeking positions in promising startups before valuations rise further.
For Mistral AI, the open-source language models form the basis for the startup to keep up with the rapid developments in the field of generative AI. If Mistral can combine innovations in efficient model training with its own offerings, its $2 billion valuation could soon look like an absolute bargain.
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