Boston Startup News- 6/26/2023


Mo Money, Mo Problems

Week of June 26th, 2023

Mistral AI, a new startup from Paris, France, co-founded by alums from Google’s DeepMind and Meta, has raised a significant seed funding round of $113 million at a valuation of $260 million. The startup aims to compete against OpenAI in building, training, and applying large language models and generative AI, focusing on open-source solutions and targeting enterprises. Their goal is to make AI useful and they plan to release their first models for text-based generative AI in 2024. They’ve noted that open source is a core part of their DNA and they intend to build models using only publicly available data. The company’s singular focus is on enterprise, not consumer, customers, and they are looking to fill a gap in the market for helping these customers figure out what they need to do, and how they can do it​. Check out “the wrap” for more detailed coverage.

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Justin D @ heyfounded

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Our final thoughts on this week’s whirlwind, in a nutshell

Capital, Vision, Execution: A Tale of High-Stakes Startup Gambles from Quibi to Mistral AI

The case of Mistral AI, which has raised a large amount of capital pre-product and pre-revenue, is not unique in the startup world. However, it is a high-stakes gamble that has its own set of challenges and risks. It’s reminiscent of Quibi, the short-form streaming service that raised $1.75 billion before it had even launched a product. Despite the hype and the high-profile involvement, Quibi ended up shutting down just six months after its launch.

Startups that raise a lot of capital pre-product and pre-revenue are making a bet that they can deliver on their vision and promise. They often rely on the expertise and reputation of their founders and team, as well as the potential of their idea, to secure funding. Mistral AI, for instance, has a team with significant expertise in AI, with co-founders from Google’s DeepMind and Meta, and this no doubt contributed to their ability to secure funding​.

However, securing funding is just the first step. These startups then need to execute on their vision, deliver a product that meets market needs, and generate revenue. This is where Quibi struggled. Despite its significant funding, it failed to attract a large enough audience and to compete effectively in the crowded streaming market.

For startups in this situation, the lessons are clear. It’s crucial to have a deep understanding of the market and potential customers, and to use this understanding to guide product development. It’s also important to be agile and flexible, to be able to pivot as needed based on market feedback. And, of course, it’s essential to deliver a product that is not just technically impressive, but that also offers real value to customers.

In the case of Mistral AI, it’s too early to tell how their story will unfold. They are operating in a rapidly evolving and highly competitive field, and they are taking a different approach by focusing on open-source solutions. It will be interesting to watch their journey and see if they can successfully navigate the challenges ahead and deliver on their promise

Justin D@ heyfounded

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