Speculation is mounting over the future of Mistral, the French AI darling and one of Europe’s few remaining large language model (LLM) builders.
Reports suggest Mistral has been in talks to raise up to $1bn in new funds, but industry insiders say the company could also be the target of an acquisition by Big Tech’s AI laggard, Apple.
Founded in 2023 by ex-DeepMind alum, Mistral fast became the darling of the European AI sector, lauded for its promise of homegrown foundation models, built independently of US players.
VCs flocked to the company. Mistral has raised more than $1bn in funding from the likes of Index, Lightspeed, General Catalyst, A16z and Nvidia, most recently in a €600m round that saw it hit a €6bn valuation in June 2024.
The company remains one of the hottest tickets in Europe’s startup sector, but it’s been outpaced by US competitors OpenAI and Anthropic, who’ve already hit valuations in the hundreds of billions of dollars and are dominating the LLMs for enterprise and consumer markets.
While some tech leaders say Mistral still has big opportunities to provide sovereign AI infrastructure and strategic enterprise deals, others warn Europe’s funding environment and limited commercialisation could hamstring the company’s ability to go it alone.
The case for an acquisition
Apple is widely considered to be falling behind big tech players like Meta, Amazon, Google and Microsoft in the AI race. It’s the only one of that group which hasn’t invested large sums in an LLM or begun developing its own — and has seen a slew of its top AI talent depart to competitors in recent times.
There are signs Apple has been looking externally in its bid to keep up, with reports emerging in June that the company had held internal discussions about bidding for US AI startup Perplexity.
Many in the tech sector see Mistral as an alternative acquisition target.
“Mistral’s efficient, open-weight models align with Apple’s on-device privacy focus, potentially accelerating Apple Intelligence upgrades,” Andreas Riegler, founding general partner at Apex Ventures. “It would secure top European talent and help counter rivals like Microsoft and OpenAI.”
For Mistral, an acquisition would be a way for shareholders and founders to cash out at a chunky valuation at a time when the company is trailing US rivals OpenAI and Anthropic in funding and commercialisation.
OpenAI could hit $12bn in annual recurring revenue this year, according to reports this week, and Anthropic is tracking at $5bn. By comparison Mistral is on track to surpass $100m in revenue in 2025, the FT reported in June.
Christophe Morvan, managing partner at investment bank Drake Star, says the acquisition rumours stem from a growing belief that Mistral can no longer compete in the global LLM race.
“Its capability to raise funds is low compared with Meta or OpenAI, with the support of Microsoft, and what the Chinese state is putting into AI.” It was, however, reported in July that Mistral is in talks to raise $1bn from deep-pocketed Abu Dhabi fund MGX.
Should a sale happen, many in the French tech ecosystem “worry” about the impact of the country losing its AI leader, says Roxanne Varza, director of Paris startup campus Station F.
“I don’t see it this way. I think it proves that France can build a leading team and an acquisition would pump money into the ecosystem. It’s also likely the young founders would relaunch something,” she says.
UK-based DeepMind, which was acquired by Google in 2014, has seen ex-employees go on to found more than a dozen European startups (including Mistral and French AI agent startup H).
What could stop a deal?
But big questions remain as to whether Mistral’s senior leadership and investors would be interested in cashing out now.
In January, founder and CEO Arthur Mensch declared the startup was not for sale,insisting the company was targeting an IPO in the long-run.
“We left big US tech to create a company in Europe, to show that Europe had something to say,” said Mensch. “That’s still the project and so the independence we have is something that we value dearly.”
There are also signs that Mistral is ramping up revenue, which could entice investors to funnel more cash into the company.
Mistral has secured contracts worth hundreds of millions of dollars and its revenues have increased several times over since it last raised in 2024, according to the FT report.
Others point to the startup’s €100m multi-year contract with French shipping and logistics giant CMA CGM — which will see Mistral identify new AI use cases within the business and develop tailor-made models and agents — as evidence of the opportunity for major strategic deals with enterprise clients in Europe.
The company is looking to tap into increasing calls for tech sovereignty in Europe and in January announced plans to invest “several billions of euros” to build its own data centre in France.
“There’s a lot of European companies that want to reduce their dependency on US providers . . . There’s a growing demand for more strategic autonomy,” Mensch said last month.
But perhaps the biggest barrier to any potential acquisition by an overseas company would be regulatory.
“The EU is publicly committed to digital and AI sovereignty,” says Jonathan Simnett, managing director at M&A advisory, Hampleton Partners. “An acquisition by a US giant, especially for a flagship European player of this size, would likely trigger severe scrutiny under EU antitrust rules and strategic autonomy policy.”
Drake Star’s Morvan says that Apple could get around that by partnering with Mistral, with the French LLM-maker agreeing to white label its tech to Apple in exchange for financing.
A direct sale would likely be blocked by the French government, particularly as President Emmanuel Macron routinely champions the company, Morvan adds.
“Given all the focus around sovereignty I don’t see it feasible politically in the short term,” he says. “You would have politicians on the left and right in the French assembly saying, ‘we are losing our AI sovereignty’.”
Mistral and Apple did not respond to requests for comment.
Read the orginal article: https://sifted.eu/articles/apple-mistral-acquisition/
