Mistral AI, a French AI startup, has taken the AI world by storm, raising an impressive €600 million ($640 million) in series B funding at a valuation of $6 billion.
The round was led by General Catalyst, with participation from existing investors such as Andreessen Horowitz, Lightspeed, Bpifrance, and BNP Paribas, as well as notable corporate backers including Nvidia, Samsung Venture Investment Corp., and Salesforce Ventures.
Founded in April 2023 by former Google and Facebook employees Timothée Lacroix, Guillaume Lample, and Arthur Mensch, Mistral AI has quickly become a major player in the global AI race.
CEO Arthur Mensch believes this funding round sends a clear signal about the company’s ability to disrupt the AI market, stating, “We showed that this wasn’t the case and we effectively disrupted the OpenAI business model.”
The company’s meteoric rise began with a $113 million seed round in June 2023, which valued the startup at $240 million pre-launch. The company is worth a remarkable 25 times more just one year later.
Since its foundation, Mistral AI has focused on developing powerful open-source language models and efficient training methodologies.
The startup’s success has not gone unnoticed by industry leaders, who are now seeking alliances. In February 2024, the company secured a distribution partnership with Microsoft, accessing Azure’s supercomputing cloud architecture for training and deploying its AI models.
Microsoft also invested €15 million ($16.3 million) in the startup, which will convert into equity during the recent funding round.
The rise of Mistral AI
Mistral AI burst onto the scene in May 2023 with a $120 million funding round, valuing the company at $250 million pre-launch.
The startup promised to pursue a divergent path in AI development centred on transparency, academic collaboration, and public code sharing rather than the closed-source approach of its Silicon Valley peers.
Many industry experts initially discounted Mistral AI’s chances against the billion-dollar research budgets of US tech juggernauts backed by the likes of Amazon, Google, and Microsoft.
However, a torrent of demos showcasing the Paris-based firm’s rapid innovations started to change perceptions.
Operating under the radar for much of 2022, Mistral AI unveiled breakthrough text-generating software in December 2023 that matched leading systems from Meta and OpenAI.
Mistral AI’s impressive AI models
One of Mistral AI’s latest models, Mistral Large, is a proprietary model that trails OpenAI’s GPT-4 in reasoning benchmarks by only around 10%.
It’s not open-source, but Mistral has since continued publishing open-source models so as not to undermine its founding principles.
These include Mistral 7B, Mixtral 8x7B, Mixtral 8x22B, and Codestral, a 22-billion-parameter coding LLM capable of understanding more than 80 programming languages.
Mistral will face pressure from the EU’s forthcoming AI Act.
French President Macron cited the fast-growing Parisian startup Mistral AI as an example of “French genius” in AI innovation and expressed concern that the regulations could inhibit such emerging players.
Some also worry that the AI Act will disproportionately hit open-source AI research efforts.
While the Act seeks to protect open-source research and support EU AI companies with funding and compute power, it’s difficult to predict how those balancing closed and open-source AI will fare in the face of stricter regulations.
Right now, however, Mistral certainly has the wind in its sails.
