Paris-based Mistral AI, a startup working on open source large language models — the constructing block for generative AI services — has been raising money at a $6 billion valuation, 3 times its valuation in December, to compete more keenly against the likes of OpenAI and Anthropic, TechCrunch has learned from multiple sources. We understand from close sources that DST, together with General Catalyst and Lightspeed Enterprise Partners, are all trying to be an element of this round.
DST — a heavyweight investor led by Yuri Milner that has been a notable backer of a number of the biggest names in technology, including Facebook, Twitter, Snapchat, Spotify, WhatsApp, Alibaba and ByteDance — is a brand new name that has not been previously reported; GC and LSVP are each previous backers and their names were reported earlier today also by WSJ. The round is about to be around, but lower than, $600 million, sources told TechCrunch.
We may also confirm that one firm that has been mentioned quite a lot of times — SoftBank — will not be within the deal in the intervening time.
“SoftBank will not be within the frame,” an individual near SoftBank told TechCrunch. That also lines up with what our sources have been telling us since March, when this round first opened up, although evidently not everyone seems to be on the identical page: Multiple reports had linked SoftBank to a Mistral investment since then.
Mistral’s round is predicated on plenty of inbound interest, sources tell us, and it has been within the works since March or possibly earlier, mere months after Mistral closed a $415 million round at a $2 billion valuation.
Mistral, per PitchBook data, has some 36 current investors, with the list also including the likes of Andreessen Horowitz (which led that Series A in December), Redpoint, Headline, Latest Wave, Emerson Collective, French banking giants bpifrance and BNP Paribas, in addition to quite a lot of strategic backers including Databricks, Nvidia, Salesforce, Snowflake and most recently OpenAI’s biggest backer, Microsoft.
This latest fundraise has been the topic of plenty of speculation in the previous couple of months (see here, here and here), however it’s been a moving goal, with the investors, round size and valuation all changing. Some investors have looked and walked away, possibly resulting from the value.
“We love the corporate, and we love Arthur,” one distinguished investor told me this week referring to Arthur Mensch, the CEO and co-founder. “We love how briskly they’re moving, but we’re not talking.”
Mistral, unlike a number of the other LLM builders like OpenAI and Anthropic, is targeted on taking an open source approach to its work. It’s considered one of the youngest of the LLM players available in the market, and notable also for being a serious effort to come back out of Europe (a “European champion,” because it’s sometimes called). Its French roots also tap into Paris as a notable hub for AI R&D, with Meta, Hugging Face, Photoroom, Nabla and plenty of others constructing there.
What’s significant about Mistral AI raising at a $6 billion valuation (post money, sources have confirmed) is that the valuation has gone up from a $5 billion goal in a matter of weeks.
Since Mistral launched its first LLM in September 2023, it has released two more. Nevertheless it has not disclosed what number of users it has nor what its revenues are looking like (it offers a range of costs to access its APIs, with pricing plans covering tokens for the three models it’s released so far, plus some customizations that Mistral has built).
All of that is to say that for now it’s not clear how closely investor interest is anchored to current business funnels versus hopeful projections for the long run.
That points to a really heated marketplace for the startup and for AI on the whole — despite the exit challenges that scaled-up, privately held technology corporations are facing.
SoftBank side step
It is true that SoftBank could be very keen to get into more AI deals, even when it’s not investing in Mistral (not now, anyway). On the back of a turnaround strong performance for the Vision Fund earlier this 12 months, the firm is spinning up more AI activity. That has included slapping down lots of of thousands and thousands of dollars to lead a $1 billion funding round for Wayve earlier this week.
And sources near Graphcore have confirmed to TechCrunch that SoftBank is indeed taking a look at possibly buying the troubled U.K. AI chip designer, too — confirming other reports from the last several months.
Graphcore’s backstory is considered one of AI clouds slightly than silver linings and is emblematic of a number of the problems that some later-stage startups are seeing at once. The chip design company spotted the chance for more efficient AI chips early on, and with some interesting IP in hand, it raised lots of of thousands and thousands of dollars over time from investors like Sequoia, Microsoft, Dell Technologies and individuals like Greg Brockman and Ilya Sutskever of OpenAI, amongst many others.
Nevertheless it’s in a market entirely dominated in sales and mindshare by a serious player, Nvidia. Graphcore’s last fundraise, at a $2.8 billion valuation, was now greater than three years ago, and it’s been inching closer to the tip of its runway. That’s led to plenty of speculation about it selling for considerably lower than that quantity, potentially for as little as between $500 million and $600 million. We understand the startup has had higher than expected revenues within the last several months, nonetheless, which has each prolonged its runway and possibly given it more options.
SoftBank would have also talked to Graphcore about investing, we understand from our source, in order that may additionally be one consequence. “Stretching it” is how one investor described the rumors that SoftBank was anywhere near a deal somehow.
But SoftBank does have a special place in its heart for chips. It still owns a large chunk of Arm, and the firm has been working on a $100 billion fund only for AI chips alone. That spans greater than just software: The corporate is indeed taking a look at getting involved with Graphcore, a U.K.-based AI chip designer.
Mistral declined to comment for this story. DST and General Catalyst haven’t responded to requests for comment. LightSpeed declined to comment on speculation. We’ll update as we learn more.
