In a groundbreaking development, French start-up Mistral AI, barely a month old, has raised €105mn ($113mn), setting a new record for Europe’s largest seed round. Founded by former Meta and Google artificial intelligence researchers, the start-up’s first round of financing gives the company a valuation of around €240mn ($260mn). The investment amplifies the burgeoning interest in AI and signals Europe’s push for an alternative to Silicon Valley AI giants.
The Founding Trio
The three founders, Arthur Mensch, Timothée Lacroix, and Guillaume Lample, bring nearly two decades of combined AI and machine learning experience from their work at Meta and DeepMind. Mensch, a former DeepMind researcher, Lample, and Lacroix, who recently left Meta, have known each other since their school days, which adds to the strength of their professional partnership. With this seed funding, Mistral AI has eclipsed some prominent AI startups’ investments, including OpenAI, Anthropic, Cohere, and StabilityAI, who raised significant amounts in their Series A and seed rounds. According to Dealroom. Co, which tracks private tech investments, the funding is the largest-ever seed round in Europe.
Leading the round of funding was Lightspeed Venture Partners, a reputed backer of companies like Snapchat, Epic Games, and StabilityAI. A diverse group of investors joined Lightspeed, including former Google CEO Eric Schmidt, French telecom billionaire Xavier Niel, and Bpifrance, the French state-backed investment bank, indicating the strategic nature of the investment. International investors like La Famiglia and Headline from Germany, Exor Ventures from Italy, and Sofina from Belgium also participated in the seed round.
Mistral AI’s Aspirations
Despite the company being in its infancy, with the first few employees starting work only days ago and no product yet developed, Mistral AI is not slowing down. The start-up plans to launch a new “large language model” similar to the “generative AI” system that powers OpenAI’s ChatGPT app in the early part of next year. Despite a general slowdown in private tech dealmaking over the past year, AI companies have continued to raise significant sums. The optimism surrounding generative AI’s transformative potential for industries ranging from customer service to programming remains strong. Notably, several AI start-ups have attained valuations of at least $1bn in 2023, including Anthropic, Adept, Character.AI, and Germany’s DeepL.
Approach Towards Data and Open Source
Mistral AI’s founders, being proponents of open source, suggest that they aim to build models through publicly available data to sidestep legal issues tied to user data training. By using this open-source strategy, Mistral is also planning to make its work accessible to safety researchers studying how to manage powerful AI. This strategy sets the start-up apart from competitors, like OpenAI, which have so far centralized their safety efforts.
The European Perspective
The investment comes at a time when European policymakers and politicians are grappling with the need to establish a stronghold in generative AI, balancing it with a desire to regulate emerging technology. The European Parliament has proposed legislation curtailing AI companies’ activities during the creation and training of their models, intending to mitigate potential adverse effects.
What’s Next for Mistral AI?
While the Paris-based AI lab has just come out of stealth mode, it has big plans for the future. Mistral is gearing up to construct its own large language models (LLMs), akin to the technology behind OpenAI’s ChatGPT. The intent is to serve business clients by enhancing their processes around R&D, customer care, and marketing, as well as providing tools to build new products with AI. The startup’s founder, Arthur Mensch, emphasized that his previous work on DeepMind’s Chinchilla, an AI model requiring less computational power for training than OpenAI’s GPT-4, has equipped him with firsthand experience in making models more efficient. He expressed optimism that there are still “lots of gains to be made.”
Mistral AI’s record-breaking seed round is not just a milestone for the company but also a significant boost for the European AI sector. With a robust founding team and substantial financial backing, Mistral AI may very well chart a new course in the AI industry. While the regulatory landscape in Europe poses a challenge, the company’s innovative approach and the confidence of its backers set a promising stage for its future endeavors.
With the recent seed funding of Mistral AI, it’s crucial for startups to understand financial management, a key element to their success.