French startup Mistral is the darling of Europe’s AI ecosystem, billed as the continent’s leading chance at creating a home-grown company to rival US and Chinese dominance.
As speculation mounts over Mistral’s future, the company has been quietly laying down roots in another part of the world. The company has a number of investors from the Gulf states, including Saudi Arabia and the United Arab Emirates (UAE), and has signed partnerships with tech providers based in the region too.
With abundant capital available and plenty of commercial opportunities in the Middle East, those ties look set to ramp up. It’s reported that Mistral is set to raise a fresh $1bn round, with discussions said to be ongoing with two state-backed Emirati funds.
If that happens, a larger chunk of Europe’s leading AI company will be under foreign ownership, raising questions over the continent’s push for technological sovereignty.
Capital and partnerships
Mistral, which was founded in 2023, first secured capital from the Gulf in June last year, when Sanabil, the tech arm of Saudi’s sovereign wealth fund the Public Investment Fund (PIF), took part in its Series B round.
Sanabil included Mistral on its list of investments on its website, leading Mistral founder Arthur Mensch to confirm it holds a stake. The investor has since removed Mistral from its website, and declined to comment when asked why.
Damac, a major Emirati real estate company, then invested an undisclosed sum in July last year.
As Mistral faces a lack of large-scale growth funds in Europe, the Middle East looks to be a viable alternative to secure large rounds of fundraising. With US investors featuring prominently in the company’s Series B, a €600m round secured in 2024 and led by DST Global and General Catalyst, this would also enable the startup to avoid over-relying on capital from a single geography.
In June this year, it was reported that Mistral is in talks to raise a $1bn round, with Abu Dhabi sovereign wealth fund Mubadala and MGX — a new fund set up last year by the Abu Dhabi government with a mandate to invest in AI infrastructure, semiconductors, AI technology and applications. Its founding partners are Mubadala, which owns 50%, and Emirati AI firm G42.
One source with direct knowledge says discussions for the round are also ongoing with PIF. Mistral declined to comment on the fundraise.
Arabic AI models and infrastructure partnerships
Earlier this year, Mistral released Saba, an AI model trained on datasets from across the Middle East and South Asia, which supports Arabic and several Indian-origin languages.
Arabic is far less well-served by AI companies than languages like French and English, partly because the number of dialects means there’s a lack of consistent training data.
The company is also turning to the Middle East to push its ambitions to become an AI infrastructure provider. Last year, Mistral announced plans to build its own data centre; the project grew in 2025 into a joint venture with MGX, French public bank Bpifrance and Nvidia to develop an AI campus in France representing 1.4 gigawatt of compute power.
At the same time Mistral unveiled a partnership with G42 to co-develop foundational AI systems and infrastructure, which includes collaboration with the Mohamed bin Zayed University of Artificial Intelligence (MBZUAI) in the UAE to work on foundational models.
Alternative global AI powers
Many of these announcements came off the back of the AI Action Summit held in Paris in February — a gathering of experts and heads of state from across the world hosted by French president Emmanuel Macron, which in part aimed to disrupt the US and China’s monopoly over AI.
In this context, the Middle East is fast emerging as a partner of choice for Europe. As governments across the Gulf try to diversify their economies away from oil and gas, technology and AI are emerging as key strategic sectors to focus efforts and funds on.
“The Middle East is an interesting region for two reasons. They have a proactive approach to tech and particularly AI, which they are leveraging to become a global power. And they are dedicating large amounts of funding, which creates consequential commercial opportunities for us,” said a Mistral spokesperson.
Mistral doesn’t have an office in the Gulf but says it is an option it will likely consider in the future given ongoing discussions with partners in the region.
The company said the startup’s focus on open-source technologies, which enables better control over the system and data, as well as its language-sensitive products like Mistral Saba, are particularly appealing to players in regions like the Middle East who are looking to reduce their dependency on US Big Tech companies.
Laurent Daudet, the cofounder of French AI startup LightOn, shares a similar experience as the company, which builds bespoke AI models for customers, grows its presence in the Middle East.
“It’s interesting to be a French company because in the geostrategic vision, with the US and Chinese juggernauts, we can be seen as more neutral,” Daudet tells Sifted.
Growing interest
Ashish Patel, managing director at investment bank Houlihan Lokey, says Gulf-headquartered investors are increasingly stepping in to fund buzzy deals they previously had limited access to. Efforts like G42 have given the region’s investors with greater knowledge of growth sectors like AI to invest in, he adds.
Founders are also increasingly recognising the commercial opportunities in the region. “It’s a region where growing economies, discerning consumers, and large state-backed developments offer novel contracting opportunities with highly strategic partners,” says Patel.
“AI is a priority topic there, and players in the region are doubling down on the technology,” says Daudet. LightOn has a dedicated team of two in the UAE to source commercial partnerships.
Varun Rekhi, growth investor at Speedinvest, says that while the Gulf-Europe corridor still lags behind the link between the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) and the US, deal flow is gaining momentum.
“Europe offers world-class R&D, ethical AI frameworks and sectoral depth; the GCC brings scale capital and a bold, long-term vision. It’s a powerful formula for building sovereign, globally competitive AI.”
Ethical ramifications
Creating closer ties with countries in the Gulf, however, also raises some concerns. Among these is the issue of accepting funds from authoritarian regimes like Saudi Arabia and the UAE.
Anthropic, for instance, was recently reported to be seeking investments from Gulf countries, with CEO Dario Amodei acknowledging that accepting money from the Middle East comes at an ethical cost but that the company could lose ground if it doesn’t tap the funds available in the region.
Daudet says this also raises questions around sovereignty. “It’s clearly a question we ask ourselves,” he says.
“It has to remain a minority part of the business, it can’t become something significant. But if it remains a minority [stake] among our investors, there is no issue around taking control.”
Mistral declined to comment.
Read the orginal article: https://sifted.eu/articles/mistral-middle-east-push/
