ChatGPT challenger Mistral AI sets new record for European funding

Former Meta and Google AI researchers plan to release their language model next year.

French startup Mistral AI has closed the largest seed funding round in European history, raising 105 million euros. The company, founded just four weeks ago by former AI researchers from Meta and Google, is already valued at 240 million euros.

"We're assembling a world-class team to develop the best generative AI models," says the company's ambitious goal.

Europe vs. Silicon Valley

The remarkable funding round underlines the growing enthusiasm for AI in the EU and the slowly growing ambition to create a serious alternative to established Silicon Valley companies such as Microsoft, OpenAI, and Google Deepmind.

Mistral AI's founders, Arthur Mensch, Timothée Lacroix and Guillaume Lample, should benefit from a leap of faith based on their experience at Meta and Google. They have attracted a number of high-profile investors: The round is led by Lightspeed Venture Partners, which has made early investments in companies such as Snapchat and Epic Games.

Other prominent investors include former Google CEO Eric Schmidt, French telecom billionaire Xavier Niel, and Bpifrance, an investment bank backed by the French government.

Mistral AI does not yet have a product, but that is expected to change soon: The company is apparently planning to develop a large language model as a European alternative to solutions like ChatGPT, Bard, or Claude. The launch is reportedly planned for early next year.

EU funding as a result of US blockade

The fact that a European startup has gained such trust so quickly may not just be due to the backgrounds of its three founders. As EU AI regulation evolves, there's also a growing need for language AI that meets European privacy guidelines and doesn't rely on the U.S. or China. European privacy issues are causing problems for Google's Bard chatbot, and EU privacy regulators have also targeted ChatGPT.

In addition to Mistral, German AI startup Aleph Alpha is also trying to catch up with the leading AI companies. It recently unveiled a major innovation to make large language models more transparent. Nyonic, another European AI startup focused on generative AI, was founded in Berlin in early June.