Investors continue to feverishly evaluate AI startups, and to avoid simply chasing a fad, they are paying particular attention to founders who are developing what is typically considered “foundational” technology.
Paris-based Mistral AI, a startup working on open-source models for large languages - the building block for generative AI services – has raised $6 billion, three times more than in December To be able to compete more strongly with companies like OpenAI and Anthropic, TechCrunch learned from several sources. We know from close sources that DST, along with General Catalyst and Lightspeed Venture Partners, are all interested in being part of this round.
DST – a heavyweight investor led by Yuri Milner, who has been a notable backer of some of the biggest names in tech, including Facebook, Twitter, Snapchat, Spotify, WhatsApp, Alibaba and ByteDance – is a new name that has not been previously reported ; GC and LSVP are both former supporters and their names were also revealed by the WSJ today. According to sources, the round is expected to be around $600 million, but less than $600 million.
We can also confirm that a company mentioned several times – SoftBank – is not currently involved in the deal.
“SoftBank is not in line,” a person close to SoftBank told TechCrunch. That’s consistent with what our sources have told us since this round began in March, although not everyone seems to agree: Multiple reports have since linked SoftBank to a Mistral investment.
Mistral’s round is based on strong inbound interest, sources tell us, and has been in the works since March or possibly earlier, just months after Mistral closed a $415 million round at a $2 billion valuation.
The fundraise has been the subject of much speculation since then (see here, here and here), but it was a moving target as investors, round size and valuation changed. Some investors took a look and then moved on, perhaps because of the price.
“We love the company and we love Arthur,” one prominent investor told me this week, referring to Arthur Mensch, the CEO and co-founder. “We love how fast they move, but we don’t talk about it.”
Mistral focuses on an open source approach to its work, unlike some other LLM developers such as OpenAI and Anthropic. It is one of the youngest LLM providers on the market and also stands out for making a big effort to get out of Europe (a “European champion” as it is sometimes called). Since launching its first LLM in September 2023, two more have been published.
The significant thing about Mistral AI reaching a valuation of $6 billion (sources have confirmed that the money was spent after the funds were paid) is that this value increased from the target value of $5 billion in a matter of weeks . Mistral has not disclosed how many users it has, nor what its revenue looks like (it offers a range of prices for access to its APIs, with pricing plans including tokens for the three models released so far, as well as some customizations created by Mistral) . )
All of this means that it is currently unclear how closely anchored investor interest in current business performance is compared to hopeful forecasts for the future.
That suggests a very hot market for startups and for AI in general – despite the exit challenges faced by mature, privately held tech companies.
SoftBank Sidestep
It Is It’s true that SoftBank is keen to do more AI deals, even if it doesn’t invest in Mistral (at least not now). Due to the Vision Fund’s strong turnaround earlier this year, the company is increasing its AI activities. That includes committing hundreds of millions of dollars to lead a $1 billion funding round for Wayve earlier this week.
And sources close to Graphcore have confirmed to TechCrunch that SoftBank is indeed considering potentially buying the troubled British AI chip designer as well – confirming other reports from recent months.
More one of AI clouds than a silver lining, Graphcore’s backstory is emblematic of some of the problems some late-stage startups are currently facing. The chip design company recognized the opportunity for more efficient AI chips early on and, with some interesting IPs, raised hundreds of millions of dollars over the years from investors such as Sequoia, Microsoft, Dell Technologies and individuals such as OpenAI’s Greg Brockman and Ilya Sutskever, among many others .
But it’s in a market that’s completely dominated in terms of revenue and mindshare by one big player, Nvidia. It’s now been more than three years since Graphcore’s last fundraising, valued at $2.8 billion, and the company is slowly nearing the end of its lifespan. That has led to much speculation that it could sell for significantly less than that amount, possibly as low as $500 million to $600 million. However, we expect the startup to have had better-than-expected sales in recent months, which has both extended its reach and potentially given it more options.
As we learned from our source, SoftBank had also discussed investments with Graphcore, so that could also be an outcome. “Tension” is how one investor described the rumors that SoftBank was close to a deal one way or another.
But chips have a special place at SoftBank. It still owns a huge chunk of Arm and the company has been working on a $100 billion fund for AI chips alone. This includes more than just software: the company is actually considering a collaboration with Graphcore, a UK-based AI chip designer.
Mistral declined to comment for this story. DST and General Catalyst did not respond to requests for comment. LightSpeed did not want to comment on the speculation. We will update as we learn more.