105 million euros: Start-up without a product receives record funding for an idea

Published On: 19.June.2023Categories: Start-up & Foundation, Tech & E-Commerce3 min read
Mistral AI
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Nora Wölflick writes about interesting, topical issues for the Love & Law Blog at Recht 24/7.

Source photo: Techcrunch

French AI start-up Mistral AI has received 105 million euros in funding just a few weeks after its founding – a record for a first round of financing. What is remarkable here is that the company does not yet have a finished product to show. Barely founded and still no finished product – yet the start-up receives a sum of millions. This may remind some of us of the dot-com bubble of the late 1990s.

Now the hype around artificial intelligence (AI) also seems to be attracting investors. This is shown not least by the example of ChatGPT, for which large sums are being invested, such as the $10 billion Microsoft put into GPT developer OpenAI.

Mistral AI: AI startup without a product receives major funding

Paris-based startup Mistral AI is now apparently benefiting from this AI hype. The company, which was founded just four weeks ago, was able to raise an impressive 105 million euros in a first round of funding, as co-founder and president of Mistral AI, Arthur Mensch, announced. According to a report in the Financial Times, this is a record. This record becomes even more impressive when you consider that Mistral AI does not yet have a finished product to show. The first employees reportedly started working for the company just days before the funding round closed.

The hype around AI topics and Europe’s race to catch up

The French startup was likely helped not only by the general hype around AI topics, but also by the fact that it was founded by former employees of AI companies such as Deepmind and Facebook’s Meta. Industry observers also expect Europe to invest heavily in the AI space to keep up with the U.S. and China. Mistral AI is focused on developing a large-scale language model, similar to the foundation of ChatGPT.

Training AI language models comes at a high cost

Training AI models for speech processing requires significant financial resources, as reported by Golem. Experts estimate that training an advanced large-scale language model such as GPT-4 or Metas Llama can cost between five and ten million US dollars. These high costs are also one of the reasons why Mistral AI has to give up a significant share of the company to the investor:in. Upon completion of the financing round, Mistral AI is valued at 240 million euros. It will be interesting to see if Mistral AI can live up to the high expectations placed on a promising European competitor to ChatGPT. Although the company does not yet have a finished product to show, it has obviously gained the confidence of investor:s as they are willing to provide significant funding. This record funding illustrates the strong belief in the future potential of AI and shows that investors are willing to invest in promising AI startups, even if they are still in the development phase. It remains to be seen whether Mistral AI will be able to meet the high expectations and succeed in the AI industry.

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