Mistral AI is a Paris-based artificial-intelligence start-up that has raised €600mn at a valuation close to €6bn. This comes just one year after Microsoft and Nvidia backed the company, which was initially launched as a rival for OpenAI.
General Catalyst is leading the investment that has tripled Mistral’s value since December. Other investors include Lightspeed, Andreessen Horowitz Bpifrance, and BNP Paribas. Nvidia is one of the corporate backers, along with Salesforce, Samsung, and IBM.
“We were told this when we began. . . Arthur Mensch, Mistral’s chief executive. “We proved that this was not the case, and we disrupted OpenAI’s business model.”
Yuri Milner’s DST Global has joined Mistral’s latest round of funding as a new investor. DST did no respond immediately to a comment request.
Microsoft, who invested €15mn as part of an agreement to sell Mistral’s product through its Azure cloud platform in February, did not take part in the second round.
The deal marks the largest ever for a startup building large general purpose AI models outside Silicon Valley. Mistral is looking to become a global competitor with more than €1bn of financial firepower.
Investors pour huge sums of money into AI start ups building large language model systems, sophisticated systems that can produce high-quality images and text in seconds. Microsoft, Google Meta, and Amazon are among the big tech companies investing tens or hundreds of millions of dollars in computing infrastructure.
According to sources close to Mistral, the latest funding consists of €468mn equity and €132mn debt, and values the company at €5.8bn, including the new capital raised. Mistral was founded mid-2023.
The company’s three co-founders — Timothee Lacroix Guillaume Lample and Mensch – a trio French AI researchers that previously worked for Google DeepMind Meta and Meta — are still the majority shareholders.
Mensch stated that Mistral used “a little more than 1,000” high-powered graphics processor units (GPUs) chips to train AI systems, and that they spent “just a few dozen million” euros to build products which can rival the ones built by the world’s richest companies, such as OpenAI, Google, and Meta, with budgets much larger.
Mensch: “We appear to be making very different calculations of the costs required to build large AI models to OpenAI Chief Sam Altman.”
OpenAI, a developer of ChatGPT, has a $13bn backing from Microsoft. The French company raised its latest round two weeks after Elon musk raised $6bn to fund his start-up xAI.
Mistral was lauded by French president Emmanuel Macron for being an example of a new European generation of start-ups that can compete with US tech giants. In June of last year, it had only been around for a few months and raised €105mn during one of the largest seed rounds in Europe. In December, its value increased to EUR2bn.
Jeannette Zu Furstenberg, General Catalyst’s European Business Leader, said that the capital efficiency of Mistral was “really outstanding”. She added that Mistral spent “the smallest fraction” of its competitors’ budgets to develop AI models.
She added, “It is really impressive how quickly this team has worked from a financial perspective and what they’ve achieved.”
Mensch stated that Mistral chose to raise additional capital after investors expressed interest in boosting its commercialisation and purchasing more computing resources. He said that the market was still capital-intensive. “The more computing power we have, then the more people can be added to our team. . . “To break down the artificial intelligence barriers.”
About 60 people work for the AI start-up, 45 of whom are in France, 10 others in the US, and five more in the UK. Around three quarters of them are involved in product development and research.
OpenAI’s AI technology is different because it offers many AI systems as “open-source” software. This means that anyone can examine and customise the source code.
Mensch says that it makes the technology more attractive to large corporate clients who don’t want to share data or depend on a US-based provider for a tech that its proponents claim can be as transformative as the internet and the smartphone.
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