French AI startup Mistral is closing a massive €385 million ($415 million) funding round led by Andreessen Horowitz that values the company at around $2 billion. The deal caps off a meteoric rise for the generative AI developer founded just 8 months ago as an open-source alternative to proprietary closed models from OpenAI and Anthropic.
Mistral was launched in May by three former researchers from AI leaders Meta, Google, and DeepMind. Just four weeks later, the fledgling startup raised a record-breaking €105 million seed round (Europe’s largest-ever) led by Lightspeed Venture Partners, valuing Mistral at €240 million. The unparalleled speed and size of funding reflects investor enthusiasm and the founders' elite expertise in generative AI.
Now, Andreessen Horowitz is in talks to spearhead the equity investment with a €200 million stake, according to people familiar with the negotiations. NVIDIA and Salesforce have signed on for another €120 million in convertible debt. The round also pulled in other high-profile backers like General Catalyst, Lightspeed, and Bpifrance. The deal marks a major advance for European AI, which is still playing catch-up in the AI race.
The company's open-source approach sets it apart, advocating for a model that encourages community development and innovation. This philosophy not only fosters broader adoption and enhancement of its AI models but also positions Mistral as a collaborative leader in the field. Mistral-7B model was one of the most popular and capable models in its class when it was released in September.
Chris McKay
The founders' pedigrees, hailing from AI leaders DeepMind, Meta, and Google, instill confidence, as does early advisor Cedric O, France's former digital minister. Mistral plans to release additional models by the end of the year.
Despite its current non-revenue status, Mistral AI's co-founder Arthur Mensch is optimistic about imminent financial gains as the company prepares to launch a new customer-centric AI platform. This forward-looking approach, coupled with the significant influx of funds, is poised to propel Mistral AI into a new realm of industry influence and success.
If it succeeds, the startup could shift the AI landscape and realize immense economic potential. But with hype outpacing reality in AI currently, Mistral must now prove its tech can match its stratospheric valuation.