French artificial intelligence start-up Mistral is seeking to raise $1 billion (£750m) from venture capital groups and Abu Dhabi’s AI fund MGX, which would value it at $10bn, as it seeks to compete with heavily funded groups from the US and China, the Financial Times reported.
The funding, which is still under discussion, would increase Mistral’s valuation from 5.8bn euros ($6.7bn, £5bn) in its last funding round, the newspaper reported.
The funds would go toward the further commercial rollout of Mistral’s Le Chat chatbot and the continued development of its large language models.
European AI
Mistral is seen as the main competitor from within Europe to AI start-ups from the US and China, and as such has been backed as a “sovereign” option by French president Emmanuel Macron.
Some European companies have also formed relationships with Mistral out of a desire to diversify away from sole reliance on the US or China, and it has a contract with the French defence ministry.
Mistral’s revenues have increased several times over since its last funding round a year ago, with the growth being driven by a handful of large customers, the FT reported.
It said Mistrals’ revenues are currently on track to surpass $100m a year for the first time.
The start-up has reportedly closed or is near to closing a small number of large commercial contracts, each of which is worth at least $100m over three to five years.
Mistral raised 600m euros in its last funding round in June 2024, and could use the new funding to help fund an ambitious data centre project outside of Paris.
New backing
The project, announced in May, could cost about 8.5bn euros and is backed by MGX, Nvidia and French state-backed investment bank Bpifrance.
Mistral has promoted its technology as an open-source, energy-efficient alternative to proprietary, power-hungry models from the likes of Google and OpenAI.
But it operates on a far smaller scale than those companies, which have been propelled to record valuations in a short time by the intense investor interest around AI.
OpenAI recently raised $8.3bn in funding that values it at $300bn, part of a broader $40bn funding round announced in March.
The latest funding was led by Dragoneer Investment Group with some $2.8bn, which the New York Times said could be one of the largest-ever single investments from one firm.
Meanwhile, Anthropic is reportedly in talks to raise $5bn in a round that would value it at $170bn.
Open-source competition
At the end of May, Reuters reported that Anthropic had reached roughly $3bn in annualised revenue, up from $2bn only two months earlier.
Facebook parent Meta Platforms also offers the open-source Llama model, while Chinese start-up DeepSeek has prompted many other Chinese AI companies to move their models to open-source, while also increasing their emphasis on power efficiency.
