Yesterday, Mistral AI, a Paris-based AI startup working on foundational models, announced a new large-scale language model that could rival OpenAI's GPT-4, a chat assistant, and a sales partnership with Microsoft. It was announced yesterday. However, Microsoft and Mistral AI suppressed this news, or at least a significant part of it.
As part of the partnership, Microsoft will invest 15 million euros ($16.3 million at today's exchange rates) in the French startup. Microsoft says this investment will be converted into equity in Mistral's next funding round.
This means that Mistral AI's rating will remain unchanged after this investment. Microsoft's stake in the AI startup will also depend on the evaluation of the next round of funding.
Mistral AI reached a valuation of approximately $2 billion in its latest funding round in December 2023. At the time, the company raised €385 million (approximately $415 million) in an investment round led by Andreessen Horowitz (a16z). The company previously raised a $112 million seed round just weeks after it was founded.
If Mistral AI can maintain its valuation through at least the next round of funding, Microsoft will own less than 1% of the French AI company.
Yesterday, Mistral AI announced Mistral Large, its flagship large language model designed to rival other top-of-the-line models such as GPT-4 and Claude 2. Unlike previous Mistral AI releases, Mistral Large is not open source. Developers can access models through Mistral's proprietary API platform.
Mistral AI and Microsoft also signed an Azure reseller agreement. As a result, Mistral AI will attract more customers with this new distribution channel.
This also means that Azure customers can access Mistral's models through Azure's model catalog. Customers who want to remain in the Microsoft ecosystem have other options in addition to OpenAI's model. Meta's Llama model is also available in Azure.
With this investment, Microsoft became a restricted interest subsidiary of OpenAI and an investor in Mistral AI. Microsoft's relationship with OpenAI has come under scrutiny from regulators in the EU and UK.
This new investment is likely to attract the attention of the European Commission. That's why Microsoft didn't make a big deal about it. When it comes to Mistral AI, the so-called European AI champion is increasingly resembling its American competitor, with its closed-source approach and long list of American backers.