A French start up founded by three former Meta and Google artificial-intelligence researchers four weeks ago has raised €105mn, the largest seed round in Europe.
According to sources close to the company, Mistral AI’s initial round of funding values the Paris-based concern as €240mn. This includes the funds raised. The record amount raised reflects the growing excitement around AI, and Europe’s desire for a viable AI alternative to Silicon Valley firms such as Microsoft’s OpenAI and Google’s DeepMind.
Arthur Mensch, Mistral’s chief executive, said: “There is an increasing awareness that this technology can transform the world. Europe must act, as a regulator as well as a consumer and investor.”
The DeepMind researcher co-founded the company with Timothee Lacroix, and Guillaume Lample who recently left Meta after several years of working for Facebook’s parent.
Mistral is led by Lightspeed Venture Partners. This early investor has backed companies such as Snapchat, Epic Games, and StabilityAI. Other investors include Eric Schmidt, former Google CEO, French telecoms Xavier Niel and Bpifrance. This is a clear indication of the strategic nature the project.
Mistral is still developing its first product and only a few of its employees have started working. It plans to release a “large language model” early next year, similar to OpenAI’s ChatGPT app that uses “generative AI”.
Antoine Moyroud of Lightspeed said that the size and speed at which Mistral was able to raise money is a testament to the expertise of the three founders who are in their 30s.
Moyroud stated that there are 80-100 people in the world with similar experience. “Right Now, for better or worse, the capital requirement in compute and top tier talent makes [launching an AI startup] quite a costly game.
Dealroom.co tracks private tech investment and says Mistral’s funding was the largest seed round in Europe. A seed round is a term used to describe a startup’s first institutional equity round. Data from Dealroom shows that in Europe (including the UK and Israel), more than $4bn was invested in AI-related businesses this year. This compares to $25bn in US.
Since the start of 2023, a handful of AI start-ups have achieved valuations at least $1bn. These include US-based a data trackable, which offers AI powered translation services A few AI start-ups, such as Anthropic in the US, Adept, Character.AI and DeepL from Germany, have been valued at $1bn or more since 2023.
The Mistral round is taking place at a moment when European politicians and policymakers are trying to find a balance between the need for the region to establish a foothold within generative AI, with the desire to regulate this emerging technology to avoid the negative effects seen in the past with innovations like social media.
Jean-Charles Samuelian Werve, CEO of French start-up Alan, and advisor to Mistral, said: “We need to show how it is beneficial to have control over our own technology destiny in Europe.”
Emmanuel Macron has urged that Europe should have leading companies in tech, energy, and defence in order to not depend on the US or China.
Cedric O is the former digital ministry for Macron’s administration who now advises Mistral. He said AI tools will be “critical in the competition of economies”, in the near future. He said that he did not want foreign companies to capture all of the value.
The European Parliament recently proposed legislation to limit what AI companies are allowed to do when creating and training their models. and broader industry concerns are echoed by Mensch, who warns that the draft legislation in its current form “would make it difficult to innovate” in a new field whose implications have not been fully understood.