After raising the highest seed funding ever for an AI startup, Mistral AI is on the brink of securing approximately another €450 million ($487 million) from a consortium of investors, with notable names such as NVIDIA and Salesforce among them. According to sources familiar with the matter, this funding effort places Mistral’s valuation at around $2 billion.

The financial arrangement comprises over €325 million in equity, spearheaded by investors led by Andreessen Horowitz, currently engaged in discussions to inject an additional €200 million into the funding pool. NVIDIA and Salesforce are set to contribute €120 million in convertible debt, although certain details remain subject to potential adjustments.

Documents reveal that Mistral’s three co-founders are consenting to sell equity, each exceeding €1 million as part of the transaction. Other key insiders, including Cedric O, the former French minister serving as the company’s chief adviser, plan to offload shares, with Cedric O expected to sell nearly €1 million worth.

The substantial $2 billion valuation of Mistral, a company with less than a year of existence, highlights the prevailing optimism in the technology sector regarding the potential and profitability of AI enterprises. 

Mistral specialises in open-source software powering chatbots and other generative AI tools, positioning itself as a cost-effective and efficient alternative to its US counterparts. In September, the startups released a 7 billion parameter model that has outperformed Llama 2 13B on all benchmarks and Llama 1 34B on several benchmarks. 

Read: Mistral AI is Making Generative AI Fun

Though, Mistral is not just going to go the open source way. The team has announced that it is parallelly developing a commercial product that will be optimised for proprietary data and private cloud deployment. “These models will be distributed as white-box solutions, making both weights and code sources available. We are actively working on hosted solutions and dedicated deployment for enterprises.”

Mistral AI was founded by Arthus Mensch from DeepMind, and Guillaume Lample and Timothée Lacroix from Meta AI. Lample was one of the core members of the team behind Meta AI’s LLaMA model, which has been leading the way in open-source.