France’s Mistral AI raises a $113M seed round to take on OpenAI

&gt; It’s very early to talk about what Mistral is doing or will be doing — it’s only around a month old — but from what Mensch said, the plan is to build models using only publicly available data to avoid legal issues that some others have faced over training data, he said; users will be able to contribute their own datasets, too. Models and data sets will be open-sourced, as well.<p>Unless I missed it elsewhere in the article this part really glosses over something I have a hard time understanding. 113M seed round at a 240M valuation for a company that has no product yet and a plan to build something like something else that already exists. This feels insane to me.

I&#x27;m usually the first guy to critise french investment strategy in overhyped fields.. However, in this case we have :<p>- really smart people, that really graduated from the very best french schools<p>- that actually have real world experience in the top research facilities in the field, in the US.<p>- that know each others very well<p>- and don&#x27;t rely solely on public funding (so they will definitely be held accountable for what they&#x27;re doing with the money).<p>This is waaaaaayyyyy above what we&#x27;re used to. So, i have to say : congrats to the team, and godspeed !

It feels like a typical &quot;young &amp; hyped&quot; European business - fanfare in the beginning, capital from old money networks that want to stay relevant, then fizzling out slowly without showing anything worthwhile later.

If I am not mistaken, their CTO and CSO had a significant impact on this year’s open-source LLM efforts, as they are some of the LLaMA authors.

I just listened to one of the team members next to Macron at a conference in Paris and I sense that French politicians really want to make this work - for protectionist reasons or just to bring back French R&amp;D in the game. With that in mind though it&#x27;s interesting to see that 40% of it is already owned by foreign capital.

Edit, fake news, clarification here: <a href="https:&#x2F;&#x2F;www.linkedin.com&#x2F;feed&#x2F;update&#x2F;urn:li:activity:7066108711152283648&#x2F;" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.linkedin.com&#x2F;feed&#x2F;update&#x2F;urn:li:activity:7066108...</a><p>---<p>Didn&#x27;t the EU just pass an AI law that prohibits generative AI?<p>&gt; <i>In a bold stroke, the EU’s amended AI Act would ban American companies such as OpenAI, Amazon, Google, and IBM from providing API access to generative AI models. The amended act, voted out of committee on Thursday, would sanction American open-source developers and software distributors, such as GitHub, if unlicensed generative models became available in Europe. While the act includes open source exceptions for traditional machine learning models, it expressly forbids safe-harbor provisions for open source generative systems.</i><p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=36324481">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=36324481</a>

This reminds me of Quaero and later Qwant. Both were French attempts to create national champion companies to compete with Google and establish digital sovereignty. Quaero totally failed. Qwant is still hanging on but nearly dead.

The Mistral is a northernwesterly wind that blows from France into the Mediterranean. Cool name for an AI startup.

If investors are going to act this way we&#x27;re gonna have a dotcom level bubble.

giving up ~30%&#x2F;40% of the shares in the seed round. That&#x27;s something you can regret

I guarantee that AI will have it&#x27;s own best fraudulent company like the rest of the other startups in each of their industry sectors: Theranos (for Healthcare), WeWork (in general), FTX (for crypto) and Nikola (for electric vehicles).<p>All thanks to the continued unjustified and extreme seed funding rounds and over-valued companies like this especially with no product or any proof other than &#x27;the team&#x27;.

I read this by Dana Blankenhorn this morning which I think a few people in France need to read.<p>This AI Boom Will Bust | The Slope of Enlightenment is Coming<p><a href="https:&#x2F;&#x2F;danafblankenhorn.substack.com&#x2F;p&#x2F;this-ai-boom-will-bust" rel="nofollow noreferrer">https:&#x2F;&#x2F;danafblankenhorn.substack.com&#x2F;p&#x2F;this-ai-boom-will-bu...</a><p>&#x27;In the end today’s AI boom is an evolution. It evolves from the huge databases built by the Cloud Czars, from the technology used to search those data stores, and from the ability of Graphics Processing Units to turn out results quickly.&#x27;<p>The French like to go in early in tech, minitel is a good example, but they almost invariably get leapfrogged by subsequent waves.<p><a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Minitel" rel="nofollow noreferrer">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Minitel</a><p>In the AI era who owns the data and data sanctity is an upcoming legal quagmire that the big players will win. I don&#x27;t see France ever being a big player in this world.

This looks very similar to this: <a href="https:&#x2F;&#x2F;techcrunch.com&#x2F;2019&#x2F;09&#x2F;13&#x2F;element-ai-raises-151m-on-a-600-700m-valuation-to-help-companies-build-and-run-ai-solutions&#x2F;" rel="nofollow noreferrer">https:&#x2F;&#x2F;techcrunch.com&#x2F;2019&#x2F;09&#x2F;13&#x2F;element-ai-raises-151m-on-...</a>

What I didn&#x27;t read was a business plan. How do they plan to capture a fraction of the value they create, and pass a fraction of that fraction on to investors?

$113M seed at $260M valuation -- a seed round that values the company at ~2x, is that conservative or expected?

A $113m seed round is unprecedented. This just goes to show that if you&#x27;re super well-connected, all the doors open up for you.

Unless they are devoting that $113M to making and releasing open source models a consumer can run, which seems unlikely, I see no way they can succeed in building a better proprietary AI.<p>Google is already feeling the threat to their $100 Billion&#x2F;year business and is willing to throw massive amounts of money at AI.<p>OpenAI isn’t so much a startup but should be seen as Microsoft’s strategic vision and as such has all the Microsoft resources to push it forward. Microsoft has poured billions into Bing for years in vain hoping to cut into Google’s search dominance. Now comes the chance to use AI to outcompete Google and they will pour their resources into it.<p>With neural networks, massive amounts of data tend to overwhelm any secret sauce. Google and Microsoft have access to massive amounts of data as well as the hardware required to process these massive amounts of data to train neural networks<p>I see this as mostly a way for a European company to ride the hype wave of AI, combine that with European paranoia and envy with regards to the US and make a lot of their investors rich.

I&#x27;m not sure that $113M is enough? They will also need to find a Tier 1 cloud partner but Azure and GCM are both taken.

Btw, Mistral is the name of a strong wind from France into the Mediterranean sea.

This is good news for Nvidia.

Well, good luck in the face of the new EU AI directive. They’re going to need the money to feed those bureaucrats.

Ahhhh the French, tech grift, has always been celebrated for its excellence. There is a California tech grift, by Marcus Andreessen, inspired by that same French excellence. It&#x27;s built on generative AI and like the best French tech grift, it&#x27;s highly speculative.

People, the AI hype is all the money from crypto finding a new home.

Vaporware.