Opinion Jul, 2023

While One AI Start-Up Lands £113 Million Seed Funding, Another Collapses: The Rollercoaster Ride of Open Source AI Ventures


Think open source AI could present some lucrative investment opportunities?

It certainly looked that way last week when Mistral AI, a 4-week old AI start-up acquired a £113 million round of seed funding.

This trailblazing start up, based in Paris, is unsurprisingly the brainchild of three founders whose past employers include both Google Deepmind and Meta. Despite being in their business infancy, they have big plans to compete against OpenAI, in the building, training and application of large language models and generative AI.

However, as with any pioneering new industry, there are also already casualties. Last week also saw the demise of Cervest. A previously hotly tipped AI champion that uses AI technology to model businesses’ climate risks.

Just 3 months ago, Cervest was listed as among “10 UK companies at the forefront of” by a seven-week-old Department for Science, Innovation and Technology. They had also secured a two-phase funding deal with investors that included former T-Mobile boss John Legere, former Microsoft executive Mike Slade and prominent tech investor Zen Matoshi, who all also joined the Cervest board.

However, last week the up and coming firm was declared insolvent and administrators Interpath were called in to deal with Cervest’s backlog of unpaid staff wages.

One thing’s for sure, the competition for talent in this industry is set to be fierce. In an interview with TechCrunch, Antoine Moyroud, who led the investment for Lightspeed, one of Mistral AI’s key investors, compares the AI sector to bigger infrastructure plays like cloud computing and database businesses rather than applications. He envisions that there will be around 5-6 players getting the lion’s share of the business and that there are just 70-100 people in the world right now with their expertise for language models and optimising them.

Bearing in the mind the UK is one of the world leaders in AI, behind the US and China, and leading purveyors of Chat GPT technology Open AI have chosen to anchor their first international office in London, the UK is already on its way to cultivating a hotbed of AI talent in the capital.

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