French start-up Mistral AI seems poised to disrupt the GenAI status quo and the two-horse race between Microsoft-backed OpenAI and Google for the GenAI crown may be a thing of the past.

Mistral AI was the centre of generative AI chats at the World Economic Forum in Davos in January 2024.

The Paris-based company was created a mere nine months ago, and it reached a €2bn ($2.2bn) valuation last month after a founding round of €400m.

Following a familiar formula, it was founded by former employees of Google DeepMind’s and Meta’s research labs. CEO Arthur Mensch created advanced models at Google DeepMind, and co-founders Guillaume Lample and Timothee Lacroix honed their skills developing early iterations of Llama while at Meta.

The company has become a mighty contender in the competitive landscape of large language models (LLMs) made by US behemoths such as Google and Amazon. Of course, it is not the only one trying to do this; startups such as Anthropic, Cohere and Hugging Face have been attempting just that with varying business models and degrees of success.

Mistral breezes in

However, Mistral AI seems confident it can compete at the highest level and boasts superstar chipmaker NVIDIA as an investor and partner, among other big names including Salesforce. Although not an investor, the company has also been singled out by Microsoft who says it is one of the top innovators building on the Azure platform today.

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By GlobalData

Mistral AI has introduced several innovations into the traditional neural network Transformer architecture resulting in optimized memory, performance, response quality and inferencing techniques, that have given its open-source platforms an edge. The company is not profitable yet, but it is already working on proof of concepts with several global corporations. Its open-source approach attracts a specific type of organization in highly regulated industries, trying to experiment with generative AI while avoiding proprietary software for compliance reasons.

In September 2023, the company released its first model, Mistral 7B, under the open-source Apache 2.0 license, and made it available as a free download rather than via proprietary APIs. Despite its relatively small size of 7 billion parameters, it punches above its weight in terms of performance and has a good overall value when it comes to operating costs.

However, the company’s latest and greatest model, Mixtral 8x7B, is only accessible via an API; although it retains a permissive license under Apache 2.0. Mixtral 8x7B is out to compete with the large language models such as Llama 2.  It uses an innovative technology dubbed Sparse Mixture of Experts (SMoEs) that dramatically reduces inference times.

European ambitions

Mistral’s innovative acumen also represents European ambitions to nurture local talent at this historical moment for AI technologies, in a continent with formidable education and research but weaker commercial acumen.

The start-up was involved in talks surrounding the preparation of the imminent AI Act which have included a special clause to exempt foundation models from certain general rules to promote innovation. In the meantime, disrupting the hegemony of OpenAI looks like an insurmountable task while the company quietly builds its GPT 5 frontier model.

However; 2024 will surely be an exciting year for generative AI, and Mistral AI will be an important part of it.