French billionaire businessman, Xavier Niel believes the European AI startup scene can grow to rival its competition in the U.S. He urges founders to resist early buyouts and instead focus on building leading AI companies.
“I think we can create big things with a few hundred million euros,” said Niel. The French billionaire made his fortune in telecoms and now invests heavily in startups, including the Paris-based AI startup Mistral.
Mistral was founded about a year ago and is currently valued at €6 billion.
Niel is confident that Europe can develop competitive AI models. However, he cautioned that the next few years will be crucial and stressed that success largely depends on founders holding their ground and not selling too early.
“Founders need to understand that if a bigger company offers to buy them at X value, it is probably worth two or three times that,” he said.
Niel is not a stranger to investing in AI startups. He backs Mistral AI, which is currently valued at around €6 billion and poses as a competitor for OpenAI in Europe. Mistral claims to have more efficient models compared to its competitors like ChatGPT.
Niel also backs San Francisco-based AI startup, Poolside, which recently secured $500 million in a Series B round, pushing its valuation to about $3 billion.
He says there is ample time for more AI winners to emerge from Europe, citing its high-quality engineering and mathematics institutes.
Niel’s optimism about the European AI ecosystem comes at a time when the ecosystem is playing catchup to its American counterpart, which has giants like OpenAI. In November 2023, Niel alongside Rodolphe Saadé and ex-Google CEO Eric Schmidt launched Kyutai, the first European non-profit AI research lab.
Niel has invested over €500 million in the French AI ecosystem and plans to invest more.
Niel firmly believes more European AI companies will become major stakeholders on a global scale. In his words, “Sure, the world moves faster now, the resources are greater. But there will always be two clever kids somewhere in the world, working out of a garage, with a technological vision or a new idea.” He added, “It will not be one company that wins, but dozens or even hundreds.”
Europe is seeing significant growth in the AI market, given the success of companies like Mistral AI, which secured over €105M shortly after its launch. Also, American startup, Poolside AI relocated to Paris following a $126 million round.
In August 2024, Europe approved the world’s first regulation for AI, the EU AI Act. The legislation emphasizes transparency and accountability while fostering innovation. The regulation comes as an attempt to encourage global investment interest in European AI businesses.