Mistral, an OpenAI Rival in Europe, in Talks to Raise Capital at a $5 Billion Valuation
Mistral, a Paris-based startup developing artificial intelligence that is open source, has been speaking to investors about raising several hundred million dollars at a valuation of $5 billion, according to a person with direct knowledge. The company, which has just recently begun to generate revenue, in December raised $415 million at a valuation of $2 billion.
The possible back-to-back financing reflects investors’ continued appetite for certain AI startups and the large amount of capital such startups need to compete with Google, OpenAI and other leaders in the field. It’s unclear which investors Mistral has spoken to about a new funding round. Its existing investors include Andreessen Horowitz, Lightspeed Venture Partners and Microsoft, which has also backed OpenAI but with far more capital.
The Takeaway
• Paris startup raised at $2 billion valuation in late 2023
• Startup has recently begun to generate revenue
• Mistral has admitted to using Meta’s open-source AI, Llama 2
A spokesperson couldn’t be immediately reached for comment.
A $5 billion valuation would stand out even among AI startups that have fetched steep prices on modest revenue. Cohere, which also develops LLMs, has been in talks to raise money at a $5 billion valuation despite generating revenue at an annualized pace of about $22 million.
Mistral charges customers that use an application programming interface to access its large language models. The models, most of which are also available for free, have surged in popularity among application developers.
Mistral is banking on its ability to convince AI customers in Europe to work with a locally based firm rather than with AI providers based in other parts of the world.
Named after a northern winter wind, Mistral was founded a year ago by former DeepMind researcher Arthur Mensch and former Meta AI scientists Timothée Lacroix and Guillaume Lample. Unlike OpenAI, Mistral is open-sourcing its models and has said that it’s developing its products in line with stricter European regulations on the safe development of such software.
Mistral experienced backlash from some researchers over its first open-source model, launched last year, for lacking the safety features to prevent users from asking for advice on how to commit suicide, for instance. Mistral has also admitted to using Meta’s open-source AI, Llama 2, to create its own AI, only disclosing that fact after the information leaked.
In February, Microsoft took a tiny minority stake in Mistral. Microsoft said it would offer Mistral’s AI models, including its most advanced one, Mistral Large, on its Azure cloud rental service. Mistral Large was designed to compete with OpenAI’s most advanced model, GPT-4.