OpenAI Rival Mistral Nears $2B Valuation With Andreessen Horowitz Backing

(Bloomberg) -- Mistral AI is in the final stages of raising roughly €450 million ($487 million) from investors including Nvidia Corp. and Salesforce Inc. in a funding round that values the OpenAI rival at about $2 billion, according to people familiar with the deal. 

The deal includes more than €325 million in equity from investors led by Andreessen Horowitz, which is in talks to invest €200 million in funding, the people said, asking not to be identified because the discussions are private. Nvidia and Salesforce agreed to contribute another €120 million in convertible debt, they said. Some of the details are in flux and may still change, the people said. 

The startup’s three co-founders agreed to sell more than €1 million apiece in equity as part of the deal, according to documents detailing the transaction terms that Bloomberg reviewed. Three other Mistral insiders are set to offload shares, including Cedric O, the former French minister who acts as chief adviser for the company, and plans to sell nearly €1 million, according to the term sheet.

A spokesperson for Mistral declined to comment. Representatives for Andreessen Horowitz, Nvidia and Salesforce declined to comment. O didn’t respond to requests for comment. 

The $2 billion valuation for a company less than a year old underscores the tech world’s unbridled optimism about the future promise and profit of artificial intelligence companies. Mistral makes open-source software that powers chatbots and other generative AI tools, a field that requires considerable computing resources. It describes itself as less expensive and more efficient than US peers. 

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Mistral, which has emerged as one of Europe’s most prominent AI startups, was founded by former scientists from Alphabet Inc.’s DeepMind and Meta Platforms Inc. who had worked on large language models similar to those offered by Sam Altman’s OpenAI. Mistral raised a $113 million initial round in June, an enormous sum for a European tech startup.

General Catalyst, Lightspeed Venture Partners, Bpifrance and several others also participated in the round, according to the documents. Lightspeed declined to comment. Representatives for General Catalyst and Bpifrance didn’t respond to requests for comment.