French AI fundraising sensation showcases Europe’s genius

He has a business concept, a prestigious French engineering degree, stints in US tech groups and now €105mn to play for. Thirtysomethings Arthur Mensch, Timothée Lacroix and Guillaume Lampall became the EU’s new AI darlings this week with a record seed fundraising round.

Their stupendous funding success – it was Europe’s largest seed round ever – values ​​the one-month-old business, Mistral, at more than €240 million, not more than expected: the company, which aims to create an open-source The language model, with B2B applications, will become a European AI champion and give it a strategic stake in how the industry is shaped and regulated globally.

The hype surrounding the French trio of former Meta and Google researchers is palpable. Paris’ great and good, including telco billionaire Xavier Niel, shipping magnate Rodolphe Sade and the Decaux family, have rushed to buy tickets, along with leading investors Lightspeed Venture Partners. Jean-Charles Samuelen-Verve, founder of French health-tech unicorn Allan – which is worth more than €2.7 billion – is advising start-ups. Yann Lecan, the chief scientist at Meta AI, is a French an ardent supporter,

As is often the case in France, the state is not far away: BPI France, a state investment vehicle with a mission to nurture “national champions,” is also a supporter.

The high-profile fundraising shows that France’s top universities, including École polytechnique and École normale supérieure – from which the Mistral founders graduated – continue to produce alumni with cutting-edge skills. The same is true of other European countries: the UK is where 130 or nearly half of European AI start-ups are based, according to data compiled by siftedIt is followed by Germany and the Netherlands.

It’s hard not to see an element of FOMO in Mistral Mania. But it’s worth noting that the founders have agreed to a large dilution—more than 40 percent, when it’s typically around 10 percent to 20 percent. in seed stage – to fund the expensive computing power needed to train their models. And investors in this sector do not have much choice. AI fundraising targeted to European start-ups this year was just $4 billion, compared to $25 billion in the US. dealer room,

Meanwhile, regulators don’t want to get caught in the trap of a technology with revolutionary potential: what could hurt these start-ups and their investors is the Artificial Intelligence Act being drawn up in Brussels.

The draft law, which is expected to be finalized by the end of the year, imposes tighter restrictions on privacy, transparency and would ban some technology.

Developers of generative AI models such as ChatGPT must disclose AI-generated content and publish summaries of copyrighted data used for training purposes. The US and China have already published their own rules. UK to host global summit on AI Security this year.

Interviewed by the Financial Times this week, Mensch issued a warning to Brussels: the EU draft law “in its current state (will) make it really, really hard to innovate in an area whose implications we don’t really know yet.” have understood”.

Asked by a 30-year-old budding entrepreneur on stage at a Paris tech gathering, French President Emmanuel Macron said Wednesday he shared his “concerns” about the EU AI Act.

“The worst-case scenario is a Europe that will invest much less than the US or China (in AI) and that will not be able to create big champions, but it will start with regulation,” he said. “That scenario is possible . . . I don’t want (the EU) to set things in stone too quickly.

He outlined a plan to encourage innovation by fostering AI “clusters” financed by a mix of public and private money.

There needed to be regulation, he said, but not without cooperation from Washington and London, a reference to the need to align Western partners in the context of tensions and rivalry with China. The French President received a polite reply from Mensch: “These are good first steps.”