Naver invests in European AI company to expand globally

[Photo provided by MistralAI]

South Korean platform giant Naver Corp. has invested in MistralAI, a leading European AI unicorn founded by a former Google DeepMind employee in May 2023, according to sources on Thursday.

Maeil Business Newspaper has learned that Naver secured equity in MistralAI via the K-Fund 2, a Europe-specialized fund anchored by Corellia Capital which Naver invested in.

While the investment amount is undisclosed, the industry estimates Naver’s investment to be in the tens of billions of won range considering K-Fund 2’s size of 270 million euros ($291.9 million).

With this investment, Naver is seeking opportunities to export its AI models overseas. The move signifies that it has secured a strong ally for its Sovereign AI strategy.

MistralAI is considered one of the strongest contenders in the global AI market, which is dominated by American companies including OpenAI and Google.

During investment discussions, MistralAI reportedly highly valued Naver’s capability to protect its domestic search market, which is almost one-of-a-kind.

Under the broad direction of Sovereign AI, Naver is accelerating its strategy to build AI models that are optimized for the cultures and languages specific to different regions worldwide by leveraging its own large-scale language model technology.

It also aims to provide various solutions and services based on these models.

A notable development is the renewed activity of Naver’s founder, Lee Hae-jin. Currently serving as the company’s global investment officer (GIO), he resumed public activities after a five-year hiatus and is dvocating for Sovereign AI.

Sovereign AI refers to building AI capabilities using one’s own infrastructure and data without relying on big tech technologies.

At an AI summit in May 2024, Lee highlight the risk of a few AI entities controlling historical and cultural perceptions, thus influencing the future. He suggests the need for multiple AI models that understand diverse cultural and environmental contexts.

MistralAI is also known to share this awareness.

The Paris-based company valued at 5.8 billion euros, emerged amid a crisis that Europe lacked proper AI companies unlike the U.S. and China. It has the full support of French government officials, including President Emmanuel Macron.

MistralAI is penetrating the market with its LLM, Mistral 7B, which has 7 billion parameters, under the open source keyword.

Confident that its products’ strengths across various languages, including English, MistralAI is positioning itself against OpenAI and Google.

The investment by Naver in MistralAI is expected to create synergy. The IT industry is viewing potential collaborations between Naver and MistralAI as more than mere equity investment.

Naver’s comprehensive technology portfolio includes its own LLM, cloud, and robotics, and it operates its own AI research lab in France, opening up various avenues for collaboration.

As MistralAI’s global influence grows, Naver’s equity value is also expected to increase, creating a win-win model.

There is speculation that Lee might meet MistralAI founder Arthur Mensch to discuss views on Sovereign AI.

The GIO recently emphasized the need for close cooperation among companies with AI capabilities when he met Nvidia Corp. CEO Jensen Huang.

Corellia Capital CEO Fleur Pellerin, who played a key role in securing this investment, mentioned that she has discussed the importance of gaining an edge in unique fields such as AI for national advantage with Lee since Corellia was founded.

She hopes that Europe and France can diversify their options through partnerships with Korea.