PSG Equity has co-led a €3bn ($3.5bn) funding round for French artificial intelligence company Mistral, valuing the three-year-old business at approximately €21bn ($24bn), according to a report by Reuters.
The investment marks a significant follow-on commitment from PSG Equity, which jointly led the round alongside South Korea’s Samsung Electronics and the EU-backed Scaleup Europe Fund. Samsung and Scaleup Europe Fund are new investors in Mistral.
The transaction represents the largest equity financing to date for a privately held European technology company, according to Mistral, and makes the AI developer the second-most valuable private technology business in Europe.
PSG Equity’s participation underlines the private equity firm’s continued backing of Mistral as it seeks to establish itself as a major European competitor in the rapidly expanding AI market.
Mistral plans to deploy the new capital towards further development of its AI models and frontier research, as it looks to compete with substantially larger US-based rivals.
The company is also expanding internationally. Chief financial officer Johan Bergqvist said Mistral’s customer base is becoming increasingly diversified geographically, with particularly strong growth in Asia and North America.
Mistral develops open AI models that allow customers to download and customise the technology on their own servers. The company has more than 125 customers and is targeting $1 billion in annual recurring revenue by the end of 2026, Bergqvist said.
Mistral is widely viewed as one of Europe’s strongest candidates for building a globally significant AI company, although its valuation remains well below those of US rivals including Anthropic and OpenAI.
Mistral has also secured a major commercial relationship with Microsoft, which agreed in July to invest billions of dollars in computing infrastructure to support the company’s European expansion. Microsoft did not participate in the latest equity financing.
