Mistral: stuck in a start-up limbo
After a week that seems to have blown up many investors’ assumptions about the artificial intelligence race, January 2024 feels like an eternity ago.
At last year’s World Economic Forum, all the buzz was around Mistral, a hot French start-up that had created a world-class AI model with a fraction of the budget of OpenAI or Anthropic.
But this year, Davos was wowed by China’s DeepSeek, which made an even better model for an even cheaper cost — beating Mistral at its own game.
The debate is still raging about whether DeepSeek did so legitimately after OpenAI told the FT it found evidence that the Chinese start-up used its proprietary models to bootstrap its rival.
But back in Paris, Mistral seems to be left in a start-up limbo.
Its $1.2bn in total fundraising and $6bn valuation seem both too much for it to go quietly into the sunset, and too little to keep up with US rivals OpenAI, Anthropic and xAI — who together have raised nearly $50bn as they hurtle towards “superintelligence”.
“They are starting to see the writing on the wall,” one Mistral investor told the FT. “They need to sell themselves.”
Davos Man is still pretty invested in Mistral’s success, as it’s currently Europe’s only AI company taking on OpenAI at its own general-purpose large language model game.
After all, this is a company that was nearly called EuroAI before it launched less than two years ago.
If Mistral were to fold its hand like Inflection or Adept and sell out to Big Tech in some contorted “acquihire” — as many VCs tell DD they believe it will — Europe loses its best hope of a seat at AI’s top table, as well as leverage against the Trump administration’s warmongering against Brussels’ tech regulators.
But as rumours swirl that someone such as Microsoft, Amazon or even SAP might scoop them up, Arthur Mensch, Mistral’s CEO, insists his company is not for sale.
“We think that what we are doing is important [to do] as an independent company,” he told the FT. “So this is not on the table.”
“Necessity is the mother of invention,” quips Mensch. But unless Mistral can pull something out of the bag by the time next year’s WEF rolls around, Europe’s hopes of AI sovereignty look fragile.