Mistral Nets $644M Funding in $6B Valuation Amid Open-Source AI Boom

The French AI startup hailed the successful funding round that yielded $644 million for the Microsoft-backed tech firm. The funding round pushed the Mistral valuation threefold as it plans to finance the development of the proprietary and open-source AI models.

The Paris-headquartered firm concluded the funding round and declared a success via a Tuesday, June 11 announcement. The round was based on the firm’s valuation as a $6 billion entity, which was barely six months old when it was valued at $2 billion. 

Mistral AI Accelerates Valuation

Mistral AI scientist Devendra Chaplot shared on LinkedIn that the startup has grown threefold since the $2 billion valuation in December last year. Besides, the researcher revealed the firm is hiring and affirmed that it has grown 25X in the past 12 months. 

The Series B round saw General Catalyst steer the fundraising. The round attracted active participation from Lightspeed Venture Partners, Cisco, and IBM. Other notable investors included Nvidia, Salesforce Ventures, Andreessen Horowitz (a16z), and Samsung Venture Investment Corporation (SVIC). 

Mistral AI chief executive Arthur Mensch hailed the new and existing investors for expressing confidence in the startup to support its pursuit of global expansion. The firm’s co-founder added that the funds will accelerate its roadmap as it pursues the accessibility of its products to everyone’s hands. 

Funding Round Key to Commercializing AI Products

The cash injection catapults Mistral into the pole position of a valuable open-source AI entity. Also, the French firm ranks fourth among AI companies, trailing Microsoft-backed OpenAI, Anthropic, and Databricks. Mistral AI journey traces from April 2023 by former Meta and Google’s DeepMind AI.

Mensch indicated during the fundraiser that the AI segment has proven a capital-intensive nature space. The executive cited the desire to scale the computing power and acquire talents as inevitable as various players seek to break the AI ceiling. 

Mensch indicated that the funds will facilitate accelerating Mistral’s roadmap, particularly enhancing its computing capacity, recruitment, and global expansion within the United States. 

In recent years, Mistral has aligned with commercializing proprietary models via API-based products. It customizes the products for the corporate clients to address specific business needs primarily that focus on personalization and privacy. 

Mistral has simultaneously developed and unveiled open-source models. The firm has unveiled Mistral 7B and Mixtral 8x7B, besides the recent addition of Mixtral 8x22B, which is tapping the Apache 2.0 license and is available to developers and researchers. 

Mistral Leadership Evident in Open-Source AI

Mistral AI’s success is attributed to open-source focus as the critical factor. Mistral performance is incomparable, particularly with Stability AI, despite its Stable Diffusion emerging as the global leader in open-source image generators only valued slightly above $1 billion despite virtually little competition.

Stability and Mistral valuation are dwarfed by Microsoft-backed OpenAI, which tripled the valuation following a February deal that placed its value at $80 billion. 

Conducting a technical-based analysis shows Mistral outperforms other more extensive offerings in several benchmarks. 

Mistral competes strongly in its open-source models against leading commercial AI models such as OpenAI’s GPT-3.5 Turbo, Google’s Gemini Pro, and Anthropic’s Claude 2 relative to the LMSys Chatbot Arena dashboard.

While Mistral AI provides a free chatbot, it generates revenue via enterprise plans and licensure of proprietary models on a pay-per-token basis. Mistral is plotting to unveil an API that facilitates model fine-tuning for clients via usage fees and subscriptions. 

Mistral confirmed plans to commercialize the models in a multi-year partnership with Microsoft’s Azure. The deal features a $16.3M investment and equity.

Mistral’s successful round coincides with the AI boom revitalizing the open-source sector and attracting significant injections from leading tech companies. 

Meta leads in 1909, while Google ranks second with 800 contributions. Microsoft ranks third with 300 compared to Apple’s 47 contributions. 

A reflection on the AI space reveals that several firms are investing beyond the open-source segment. 

Like Mistral, other startups, including Perlexity.ai, Inflection.ai, Character.ai, and Modal.com, have announced successful funding rounds. The funds are helping the startups advance in their pursuit of generative AI applications.

Editorial credit: Poetra.RH / Shutterstock.com

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