French AI Startup Mistral Targets $1B Funding at $10B Valuation

French AI startup Mistral is negotiating a $1 billion funding round that would value the company at $10 billion, according to the Financial Times. The round is backed by venture capital groups and Abu Dhabi's AI fund MGX, and would nearly double Mistral's valuation from €5.8 billion ($6.7 billion) in its last round in June 2024. The funds will accelerate the commercial rollout of Mistral's Le Chat chatbot and further development of its large language models. The company is seen as Europe's primary AI competitor to US and Chinese startups, and has been endorsed by French President Emmanuel Macron as a “sovereign” option. Mistral already holds a contract with the French defence ministry, and some European companies are turning to it to reduce reliance on US or Chinese technology.

Mistral's revenue is on track to surpass $100 million annually for the first time, driven by a handful of large customers. The startup has closed or is near closing several multi-year contracts worth at least $100 million each. The new funding could also support an ambitious data center project outside Paris, announced in May, costing about €8.5 billion and backed by MGX, Nvidia, and French state-backed investment bank Bpifrance. Mistral promotes its technology as an open-source, energy-efficient alternative to proprietary models from Google and OpenAI, but operates at a much smaller scale. For context, OpenAI recently raised $8.3 billion at a $300 billion valuation, while Anthropic is reportedly seeking $5 billion at $170 billion. Meta offers open-source Llama models, and Chinese startup DeepSeek has pushed many Chinese AI companies toward open-source, energy-efficient approaches.