The Rise of Mistral: The EU’s New AI Darlings

They have a business concept, prestigious French engineering degrees, stints at US technology groups, and now 105 million euros to play with. Thirty-year-olds Arthur Mensch, Timothée Lacroix, and Guillaume Lample became the EU’s new AI darlings this week, with a record fundraising drive.

A Spectacular Financial Success

Their spectacular financial success—the largest seeding round ever in Europe—values ​​one month’s business, Mistral, at more than 240 million euros. With little more than hope, Mistral aims to build an open-source language model with B2B applications. The company’s vision is to become a European champion of artificial intelligence, giving the bloc a strategic stake in how the industry is shaped and regulated globally.

The excitement surrounding the French trio of former Meta and Google researchers is evident. The great and the good of Paris, including telecommunications billionaire Xavier Niel, shipping magnate Rodolphe Saadé, and the Decaux family, rushed to buy a ticket along with lead investor Lightspeed Venture Partners. Jean-Charles Samuelian-Werve, the founder of French healthcare technology unicorn Alan, worth over 2.7 billion euros, is also assisting the start-up. Meta AI chief scientist Yann LeCun, a Frenchman, is an enthusiastic supporter.

As is often the case in France, the state is not far off: BPI France, a state investment vehicle with a mission to cultivate “national champions,” is also a backer.

Top French Universities Producing Cutting-Edge Skills

The high-profile fundraising shows that top French universities, including École polytechnique and École Normale Supérieure, continue to produce alumni with cutting-edge skills. The UK is where nearly half of Europe’s 130 or so AI start-ups are based, followed by Germany and the Netherlands.

It’s hard not to see an element of Fomo in Mistral’s frenzy. But it’s worth noting that the founders agreed to a large dilution—over 40%—to fund the expensive computing power needed to train their model. Investors in the region don’t have many options, as AI fundraising for European start-ups was just $4 billion this year, compared to $25 billion in the U.S.

The Impact of Regulation on AI Start-ups

Regulation is a concern for AI start-ups and their investors. The Artificial Intelligence Act being prepared in Brussels imposes strict restrictions on privacy, transparency, and would ban some technologies. The US, China, and Britain have already published their own rules.

Mensch, one of the founders of Mistral, warned that the EU bill would make it very difficult to innovate in a field whose implications we don’t yet understand. French President Emmanuel Macron shared his concerns about the EU’s AI law, stating that the worst-case scenario is a Europe that would invest much less than the United States or China in AI but would start by regulating.

Macron outlined a plan to encourage innovation by fostering AI “clusters” funded with a mix of public and private money. Regulation had to happen, he said, but not without cooperation with Washington and London to align Western partners amid tensions and rivalry with China.

Additional Piece: The Future of AI in Europe

While Mistral’s success demonstrates the potential for AI start-ups in Europe, it also sheds light on the challenges they face. Here are some insights into the future of AI in Europe:

1. The Need for Strong Government Support: With the US and China leading the race in AI development, it is crucial for European governments to provide strong support to foster innovation and create an environment conducive to the growth of AI start-ups. This support can come in the form of funding, regulatory frameworks that promote innovation, and collaboration with other countries.
2. Investment in Research and Education: To compete globally, Europe needs to invest in research and education in the field of AI. This includes funding research projects, establishing AI-focused institutes and centers of excellence, and developing AI-specific curricula in universities.
3. Building a Strong AI Ecosystem: Collaboration between AI start-ups, established companies, research institutions, and government bodies is essential to build a strong AI ecosystem in Europe. This ecosystem should facilitate knowledge sharing, mentorship programs, and access to resources and funding.
4. Addressing Ethical and Regulatory Challenges: As AI technologies become more advanced, it is important to address ethical and regulatory challenges associated with their use. European countries should work together to develop ethical guidelines, privacy regulations, and frameworks for responsible AI development and deployment.
5. Encouraging International Collaboration: Collaboration between European countries and other global leaders in AI, such as the US and China, is crucial to exchange knowledge, share best practices, and collectively address the challenges and opportunities presented by AI.

In summary, Mistral’s record fundraising reflects the potential for AI start-ups in Europe. However, with regulatory challenges and fierce global competition, European governments and stakeholders need to take concerted efforts to support, invest, and build a strong AI ecosystem. By addressing these challenges and fostering collaboration, Europe can position itself as a significant player in the global AI landscape.

They have a business concept, prestigious French engineering degrees, stints at US technology groups and now 105 million euros to play with. Thirty-year-olds Arthur Mensch, Timothée Lacroix and Guillaume Lample became the EU’s new AI darlings this week, with a record fundraising drive.

Their spectacular financial success – it was The largest seeding round ever in Europe — values ​​one month’s business, Mistral, at more than 240 million euros with little more than the hope: that the company, which aims to build an open source language model with B2B applications, will become a European champion of artificial intelligence and giving the bloc a strategic stake in how industry is shaped and regulated globally.

The excitement surrounding the French trio of former Meta and Google researchers is evident. The great and the good of Paris, including telecommunications billionaire Xavier Niel, shipping magnate Rodolphe Saadé and the Decaux family, rushed to buy a ticket along with lead investor Lightspeed Venture Partners. Jean-Charles Samuelian-Werve, founder of French healthcare technology unicorn Alan, worth over 2.7 billion euros, is assisting the start-up. Meta AI chief scientist Yann LeCun, a Frenchman, is an enthusiastic supporter.

As is often the case in France, the state is not far off: BPI France, a state investment vehicle with a mission to cultivate “national champions”, is also a backer.

The high-profile fundraising shows that top French universities, including École polytechnique and École Normale Supérieure — from which Mistral’s founders graduated — continue to produce alumni with cutting-edge skills. The same goes for other European countries: the UK is where nearly half of Europe’s 130 or so AI start-ups are based, according to data collected by Siftedfollowed by Germany and the Netherlands.

It’s hard not to see an element of Fomo in Mistral’s frenzy. But it’s worth noting that the founders agreed to a large dilution: over 40%, when typically it’s somewhere between 10% and 20%. at the seed stage – to fund the expensive computing power needed to train their model. And investors in the region don’t have many options. AI fundraising for European start-ups was just $4 billion this year, compared to $25 billion in the U.S., according to Dealroom.

Meanwhile, regulators do not want to be caught off guard by a technology with revolutionary potential: what could harm these start-ups and their investors is the Artificial Intelligence Act that is being prepared in Brussels.

The bill, which is expected to be finalized by the end of the year, imposes strict restrictions on privacy, transparency and would ban some technologies.

Developers of AI models like ChatGPT should disclose AI-generated content and publish summaries of copyrighted data used for training purposes. The US and China have already published their own rules. Britain to host a global summit on AI security this year.

Interviewed this week by the Financial Times, Mensch issued a warning to Brussels: the EU bill “at present [would] make it very difficult to really innovate in a field whose implications we don’t yet understand.”

Questioned by the 30-year-old neophyte entrepreneur on stage at a Paris tech rally on Wednesday, French President Emmanuel Macron said he shared his “concerns” about the EU’s AI law.

“The worst case scenario is a Europe that would invest much less than the United States or China [in AI] and that would not be able to create great champions, but it would start by regulating,” he said. “This scenario is possible. . . I do not want [the EU] setting things in stone too soon.

He went on to outline a plan to encourage innovation by fostering AI “clusters” funded with a mix of public and private money.

Regulation had to happen, he said, but not without cooperation with Washington and London, a reference to the need to align Western partners amid tensions and rivalry with China. The French president received a polite response from Mensch: “These are good first steps.”