PSG Equity has co-led a €3bn ($3.5bn) funding round for French artificial intelligence company Mistral that values the three-year-old business at approximately €21bn ($24bn), according to Private Equity Wire. The round was jointly led by PSG Equity alongside South Korea’s Samsung Electronics and the EU-backed Scaleup Europe Fund, according to Private Equity Wire.
Syndicate and investor mix
Samsung Electronics and the Scaleup Europe Fund are new investors in Mistral, according to Private Equity Wire. The investment is described as a significant follow-on commitment from PSG Equity in Mistral, according to the same report.
Size, valuation, and European standing
The transaction represents the largest equity financing to date for a privately held European technology company, according to Mistral via Private Equity Wire. Mistral said the round makes it the second-most valuable private technology business in Europe, according to Private Equity Wire.
Product, go-to-market, and use of proceeds
Mistral plans to deploy the new capital toward further development of its AI models and frontier research as it looks to compete with substantially larger US-based rivals, according to Private Equity Wire. The company is also expanding internationally, and chief financial officer Johan Bergqvist said Mistral’s customer base is becoming increasingly diversified geographically with particularly strong growth in Asia and North America, according to Private Equity Wire.
Mistral develops open AI models that allow customers to download and customise the technology on their own servers, according to Private Equity Wire. The company has more than 125 customers, and Bergqvist said Mistral is targeting $1 billion in annual recurring revenue by the end of 2026, according to Private Equity Wire.
Mistral is widely viewed as one of Europe’s strongest candidates for building a globally significant AI company, although its valuation remains well below those of US rivals including Anthropic and OpenAI, according to Private Equity Wire. The publication reported that PSG Equity’s participation reflects continued backing of Mistral as it seeks to establish itself as a major European competitor in the rapidly expanding AI market.
Microsoft relationship and participation in the round
Mistral has secured a major commercial relationship with Microsoft, which agreed in July to invest billions of dollars in computing infrastructure to support the company’s European expansion, according to Private Equity Wire. Microsoft did not participate in the latest equity financing, according to Private Equity Wire.
Widely-known context: Private funding rounds in artificial intelligence companies often combine capital for model development with spend on computing infrastructure. Many AI developers compete globally, with major companies headquartered in both Europe and the United States.
