OpenAI rival Mistral AI nears $2 billion valuation with backing from Andreessen Horowitz, Nvidia, others

Mistral AI, a generative AI startup co-founded by former researchers from Meta Platforms and Alphabet, is in the final stages of securing $487 million (roughly €450 million) in funding from notable investors, including Nvidia Corp. and Salesforce Inc., Bloomberg reported, citing people familiar with the ongoing talks.

The report comes just a few days after the Paris, France-based startup was reportedly seeking to raise an additional $300 million in new funding emerging startups seek funding to challenge industry giants like OpenAI, Microsoft, and Google’s dominance in the generative AI space.

According to Bloomberg, the funding round values the OpenAI competitor at approximately $2 billion. A significant portion of the investment, over €325 million, is expected to come from investors led by Andreessen Horowitz, which is reportedly in discussions to contribute €200 million. Nvidia and Salesforce are also said to be committing €120 million in convertible debt, though certain details of the deal are still subject to change, Bloomberg reported.

As part of the transaction, Mistral’s three co-founders are set to sell over €1 million each in equity, as per documents reviewed by Bloomberg. Additionally, three other insiders, including Cedric O, the former French minister serving as the company’s chief adviser, plan to offload shares, with O looking to sell nearly €1 million worth. However, Mistral and the involved parties have refrained from commenting on the matter.

The reported $2 billion valuation for Mistral, a company less than a year old, reflects the industry’s optimistic outlook on the potential of artificial intelligence companies. Mistral specializes in open-source software for chatbots and other generative AI tools, positioning itself as a more cost-effective and efficient option compared to its U.S. counterparts. Founded by former scientists from Alphabet Inc.’s DeepMind and Meta Platforms Inc., Mistral had previously raised a substantial $113 million in its initial round in June, marking a noteworthy achievement for a European tech startup.

Notable participants in Mistral’s funding round include General Catalyst, Lightspeed Venture Partners, and Bpifrance, among others. While Lightspeed declined to comment, representatives for General Catalyst and Bpifrance did not respond to requests for comment.

Founded in 2023 by Arthur Mensch (CEO), Guillaume Lample, and Timothee Lacroix, Mistral specializes in developing large language models and various AI technologies. The company’s name, derived from a northern winter wind, reflects its aspirations to become a significant player in the AI domain.

Mensch, Mistral’s CEO and a former DeepMind research scientist said the company’s mission is to “construct the next generation of AI systems capable of solving real-world problems.” He added that the new funding will be used to expand the team, accelerate research and development efforts, and establish new offices across Europe and the United States.