Mistral AI Secures Funding at $6 Billion Valuation, Advancing Competition in Generative AI
Paris-based Mistral AI, a startup focused on open-source large language models (LLMs) — the foundation of generative AI technology — is successfully raising funds at a valuation of $6 billion, tripling its December valuation to enhance its competition against industry leaders like OpenAI and Anthropic. According to sources, DST Global, alongside General Catalyst and Lightspeed Venture Partners, is poised to participate in this funding round.
DST Global, led by prominent investor Yuri Milner, has a history of backing major tech players, including Facebook, Twitter, Snapchat, Spotify, WhatsApp, Alibaba, and ByteDance. This marks DST's first reporting in relation to Mistral, while General Catalyst and Lightspeed Venture Partners have previously supported the startup, as noted by the Wall Street Journal. The upcoming funding round is expected to raise approximately $600 million or slightly less.
However, it's confirmed that SoftBank is not part of this current investment phase. A representative close to SoftBank stated, “SoftBank is not in the frame,” aligning with information our sources have provided since March when this financing round began. Despite multiple reports linking SoftBank to Mistral's investment, it seems there have been misunderstandings regarding its participation.
Sources indicate that Mistral's funding round has garnered significant interest and has been evolving since March, shortly after securing $415 million at a $2 billion valuation. PitchBook data reveals that Mistral boasts 36 investors, featuring notable names such as Andreessen Horowitz (which led the Series A in December), Redpoint, Headline, New Wave, Emerson Collective, as well as leading French financial institutions bpifrance and BNP Paribas, among others. Additionally, strategic partners like Databricks, Nvidia, Salesforce, Snowflake, and Microsoft's major investment arm have also engaged with Mistral.
This latest fundraising effort has attracted considerable attention and speculation, especially regarding investor involvement and round size. Notably, some investors have expressed interest but ultimately opted out, possibly due to pricing concerns. “We love the company and Arthur,” an investor highlighted, emphasizing admiration for Mistral's CEO and co-founder Arthur Mensch, yet noting the absence of discussions.
Unlike other LLM developers such as OpenAI and Anthropic, Mistral is committed to an open-source approach. As one of the newest entrants in the LLM sector, it represents a significant European endeavor, often referred to as a “European champion.” With Paris emerging as a key hub for AI research and development, Mistral joins other influential AI organizations like Meta, Hugging Face, Photoroom, and Nabla in the region.
The significance of Mistral AI's $6 billion valuation (post-money) is notable, as it has surged from a prior target of $5 billion within weeks. Since launching its first LLM in September 2023, Mistral has introduced two additional models. However, it has not publicly disclosed user numbers or revenue details, as it provides a range of API access pricing plans for its models and custom solutions.
At present, the extent to which investor interest is tied to actual business metrics versus optimistic projections remains unclear. This reflects a highly competitive landscape for startups, particularly in the AI sector, despite the current challenges faced by larger privately held tech companies.
SoftBank's AI Strategy
While SoftBank is keen to explore more AI opportunities, it currently is not investing in Mistral. Following a positive turnaround for the Vision Fund, SoftBank is actively ramping up its AI initiatives, including leading a recent $1 billion funding round for Wayve. Additionally, sources have indicated that SoftBank is considering a possible acquisition of Graphcore, a struggling U.K. AI chip designer, confirming ongoing speculation.
Graphcore, which recognized the need for more efficient AI chips early on, has raised substantial funds from notable investors including Sequoia and Microsoft. Despite its innovations, it faces fierce competition from Nvidia, which dominates the market. Graphcore’s last valuation of $2.8 billion dates back over three years, and it may now sell for significantly less, with estimates ranging between $500 million and $600 million. Encouragingly, recent revenue performance has extended Graphcore's financial runway.
SoftBank's interest in Graphcore is evident, although industry sources describe ongoing discussions as speculative. The firm remains committed to its chip investments, particularly through its significant stake in Arm and plans for a dedicated $100 billion fund for AI chips.
Mistral declined to comment, while DST Global, General Catalyst, and LightSpeed have not responded to requests for information. Updates will follow as more details emerge.
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