AI startup Mistral in talks with MGX, others to raise up to $1 billion

The Mistral AI website.

French artificial intelligence startup Mistral AI is in talks to raise as much as $1 billion in equity from several investors including Abu Dhabi fund MGX, according to people familiar with the matter.

Along with the equity financing, Mistral is in talks for hundreds of millions of euros in debt from French lenders including Bpifrance SACA, some of the people said, asking not to be identified discussing private information. Bpifrance is already a Mistral investor. The discussions are preliminary and subject to change, and it wasn’t immediately clear what Mistral’s valuation would be after an investment, the people said.

Spokespeople for Mistral, MGX and Bpifrance declined to comment.

Such a deal would deepen ties between France and the United Arab Emirates in a field increasingly dominated by the US and China. Mistral is Europe’s biggest AI startup and has raised more than €1 billion ($1.17 billion) since its 2023 founding, reaching a valuation of €5.8 billion after a round last year. However, it hasn’t kept pace with US competitors like OpenAI and has been pivoting toward more bespoke services.

Still, Mistral remains central to French President Emmanuel Macron’s push for AI sovereignty. Mistral, MGX and Nvidia Corp. have teamed up to build Europe’s biggest AI data center campus, while Emirati ruler Sheikh Mohamed bin Zayed has committed to spending €50 billion on AI projects in the country.

MGX will provide the initial money for the UAE’s investments, French officials have said. The wealth fund is a prolific AI investor and has backed OpenAI and xAI. It is also a partner in OpenAI’s Stargate project and another mega-fund for data centers that includes Nvidia and Microsoft Corp.

Arthur Mensch, Mistral’s chief executive, said earlier this year that his company would spend several billion euros on computing facilities, including a new plant near Paris stocked with the latest high-end chips. In June, Nvidia announced plans to help develop an “AI cloud” service in France called Mistral Compute using 18,000 of its new Grace Blackwell chips.

The debt Mistral is in talks to raise would provide funds for Mistral Compute, according to the people familiar with the plans.

Mistral’s investors include Microsoft and US venture capital funds Lightspeed Venture Partners, General Catalyst and Andreessen Horowitz.