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French AI start-up Mistral secures €2bn valuation

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French artificial intelligence start-up Mistral has been valued at €2bn in a blockbuster funding round set to close as early as Friday, becoming the latest beneficiary of the investor frenzy to buy into the world’s hottest AI companies.

The Paris-based company has secured the lofty valuation through new investment led by prominent Silicon Valley venture firm Andreessen Horowitz, according to multiple people with knowledge of the talks. Others involved in the funding round include tech giants Nvidia and Salesforce, French bank BNP Paribas and US venture capital firm General Catalyst.

Two people said the size of the new round was worth roughly €400mn, comprised mostly of equity with a smaller convertible debt component. The deal is expected to be signed shortly, with an announcement due next week.

The €2bn valuation, which includes the money raised, represents a substantial increase from June, when the weeks-old group raised €105mn at a €240mn valuation in a deal led by Lightspeed Venture Partners.

The valuation for a nascent start-up founded in May by three former Meta and Google AI researchers, reflects the belief among many in Silicon Valley that AI has the potential to upend huge swaths of the economy and society. 

Like Microsoft-backed OpenAI, Mistral is working on generative AI through so-called large language models (LLMs) that are capable of creating humanlike prose and code in seconds. The development of the technology is capital intensive however, as LLMs require copious amounts of computer processing power. 

That issue has given an advantage to deep pocketed tech giants in the US and China who lead in the innovation race to date, but Mistral has emerged as one of Europe’s brightest and best funded hopes in the field of generative AI. 

One of the French company’s founders Arthur Mensch told the Financial Times in October that their technology was more efficient and cost less than the ones being developed by its larger US rivals.

Mistral is also betting on an “open source” approach, in which the model would be published publicly so as to allow developers and companies to build on top of it and contribute to its advancement.

Mensch added that while the company was not yet making any money, he expected that to change “before the end of the year”, as it readies a new platform for customers to access its AI models.

Other investors in Mistral include former Google chief Eric Schmidt, French telecoms billionaire Xavier Niel, and Bpifrance, the French state-backed investment bank.

Mistral, Andreessen Horowitz, Salesforce, Nvidia, BNP Paribas and General Catalyst declined to comment.

Bloomberg previously reported that Mistral was nearing a new fundraising round.

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