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Andreessen Horowitz’s $415M Mistral investment rounds out AI strategy

One of the most prolific investors in Silicon Valley is rounding out its AI strategy by backing an open-source large language model creator.

Andreessen Horowitz co-founder Marc Andreessen
(Chip Somodevilla/Getty Images)


Twelve years ago, prolific VC firm Andreessen Horowitz proclaimed that “software is eating the world.” Today it has a more current mantra: “AI will save the world.”

A16z has made a play to own every part of the generative AI value chain, with more than 20 investments according to PitchBook data. The firm has backed healthcare and bioscience AI startups, code automation and development companies, and startups working on large language models and their infrastructure—including taking a stake in OpenAI‘s $300 million round in April.

The firm’s latest investment, leading a €385 million (about $415 million) Series A for Mistral AI at a reported $2 billion valuation, rounds out this AI strategy with a16z’s first bet on an open-source large language model creator.

 

The Mistral investment makes good on one of the key points in a16z co-founder Marc Andreessen’s screed on AI. In June, Andreessen wrote: “Open source AI should be allowed to freely proliferate and compete with both big AI companies and startups. There should be no regulatory barriers to open source whatsoever.”

Startups are embracing open-source large language models at the behest of their investors as these models are more customizable and cheaper to deploy. Closed proprietary models like OpenAI’s ChatGPT and Anthropic‘s Claude have netted some of the largest VC deals within the generative AI space, but licensing their models has been expensive. Investors, like Andreessen, claim that open-source models will drive down costs and level the playing field.

To further support the development of open-source models, a16z launched a grant program in August. The firm has stated the program is not about investing in startup developers and seeking a financial return, but simply about backing those working to create more open-source models.

A16z is one of the most active investors in generative AI, according to PitchBook data. In September, it invested in AI drug discovery specialist Inceptive‘s $100 million round, and in April the firm led vector database startup Pinecone‘s $100 million Series B. Despite a broader VC trend in which deals are primarily flowing to startups working on the underlying technology powering AI, a16z has also backed AI content creation startups, investing in Ideogram‘s $16.5 million seed round.

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