OpenAI, Europe’s answer will be launched in 2023. Now, it’s worth €6bn

Arthur Mensch is a Paris celebrity. The entrepreneur, who is also the chief executive officer of Mistral (Europe’s answer to OpenAI), has become a celebrity not only in Silicon Valley but in his own country.

Mistral, named after the cold, strong wind that blows out of southern France and into the Mediterranean Sea, is described by Mensch, 32 years old, a former professor, as “a French Wind, and a Wind of Change”. If there was any doubt, the name Mistral, also in this order, stands for intelligence artificial which is French for AI.

The change seemed to have come out of nowhere. It was founded only last year by Mensch, Guillaume Lample, and Timothee lacroix who are all in their 30s. Former researchers from Google DeepMind met at Ecole Polytechnique, Ecole Normale Superieure and grandes écoles in France, both of which are specialised in science and engineering. They developed AI in the US for American companies and then set out to replicate this work in Europe.

Mistral received funding in a record time from the most prestigious American investment firms including Lightspeed Ventures and Andreessen Horowitz. Eric Schmidt, former Google CEO, and Xavier Niel the telecoms billionaire, were among the French who invested.

Paul Murphy is a partner in the London office of Lightspeed and serves on the board of Mistral. He was a member of the team which brought Mistral to Lightspeed’s attention. He said that the founders were among the top 10 researchers in AI at the moment. “When we invested, the company was already on the right track.”

The company builds large-language AI models, a technology that is trained on huge amounts of data to learn from examples and create new content. For example, it writes stories. The company has a chatbot named Le Chat (pronounced like the French word for cat rather than English talking) and an open platform for developers, called La Plateforme. Microsoft announced in February a revenue sharing partnership with Mistral AI to distribute their models. Similar deals are in place with AWS, Databricks and Mistral AI.

In June, it announced that it had received €600 million in funding from General Catalyst as well as Nvidia and Salesforce. Samsung, IBM, and Samsung were also among the backers. The total amount raised in less than one year was more than €1billion, giving the company an incredible valuation of nearly €6billion. This propelled the company into a leadership position in AI, but kept it under the control of its founders. Its rapid product launch caught everyone by surprise.

Only a few so-called “frontier AI” companies exist in the world. Sovereignty is prized because most are located in the United States. Mistral’s European roots are important and could become more so in the race to control AI. Yann LeCun wrote on July 19 that Meta will not release its multimodal AI models and products in the EU due to an uncertain regulatory environment.

Yann LeCun, of Meta, has highlighted Europe’s “unpredictable regulation environment”.

Mistral, unlike OpenAI and Anthropic, but similar to Meta, has a technology that is “open-source”. This means the company makes its software and tools available to researchers, developers, and other companies for them to modify and refine. Mensch believes that this is a good way to improve a product.

Murphy added that it gave Lightspeed confidence to invest. “AI is different from other software, and there’s no chance that the most sensitive data will be sent to a blackbox.”

Mistral AI is focused on complex use-cases in finance, technology, and the public sector. Marjorie Janiewicz is the former chief revenue office at Foursquare, and a French ambassador for technology in San Francisco. She was hired to manage the American operations of the company, which has more than 1,000 leads coming from the biggest companies around the world. The team is still small compared to its peers but it hires carefully. Mistral has created a list with 50 AI experts that it is looking to hire. Some of these people have already been hired.

Mensch attributes the success in AI across the Channel, to both the country’s well-respected computer science and mathematics educational system as well as a renaissance in its technology scene. Paris has seen a rise in technology companies over the last decade. President Macron is credited with this, as he pledged to make France “a start-up nation” and challenge the dominance by America and China.

When Europe created AI legislation, President Macron stood behind Mistral and fought against strict rules.

Murphy stated that “Europe produced some of the world’s best scientists, researchers and technology for many decades but they never received any credit as these were exported to the US.” “You have now some of the most successful companies in the entire world being built in Europe and the UK by Europeans and Brits, and invested in by funds such as us who have a presence in the region. The life cycle now works in the same way as it did in Silicon Valley and the US.

Macron has always stood behind the company. He fought for more innovation-friendly rules when Europe was creating AI laws. Political ties also extend to the business. Cedric O is a 41-year-old former French digital minister and member of the board of directors of the company. He preaches the importance of accelerating European technology.

He told Sifted – a media platform that covers the start up sector – recently, “Geopolitics is a war not about position, but rather movement.” The last time France believed it solved its problem when it hid behind the Maginot Line, it did not end well.

There are still challenges to overcome. The political winds have changed, not least. France’s unpredictable electoral result has created insecurity, and uncertainty about whether the business-friendly landscape will continue. There are also practical considerations. Mistral has warned that there is a shortage of data centres and grids in Europe for training its models.

Audrey Herblin Stoop, the head of public affairs at the company, stated: “We have reached the limit.” She added, “We must build data centres, and make sure there is enough power for the current scale of AI development.”

The company is valued at a much higher amount than the Silicon Valley rivals, but it still has fewer resources. Microsoft has given OpenAI $13 billion, Anthropic $8 billion, and Elon Musk’s xAI 6 billion dollars, which are funds that will be used to pay for expensive computing power, infrastructure, and talent. Mistral faces a number of challenges, including managing its next phase of growth in an increasingly competitive and fast-changing world.