Investing.com -- French artificial intelligence startup Mistral AI is negotiating to raise approximately €3 billion ($3.5 billion) at a valuation of about €20 billion, according to a Friday report by Bloomberg. The funding round would provide the Paris-based company with resources as it competes in the computing race against rivals in the US and China.

The discussions with investors remain in early stages and terms could still change, the report said. The valuation may increase based on investor demand. Mistral was valued at €11.7 billion when it raised funds in September.

ASML Holding NV is the company's largest shareholder. The Dutch firm invested €1.3 billion and acquired an 11% stake in Mistral during last year's funding round.

Mistral was founded in 2023 by researchers from Google DeepMind and Meta Platforms Inc. The company positions itself as Europe's response to Silicon Valley's leadership in artificial intelligence. Mistral operates as an infrastructure provider for European governments and companies, constructing cloud-computing facilities it manages in France and Sweden.

The company has marketed its AI services for engineering and manufacturing applications, securing agreements with major European industrial companies including Airbus SE and BMW AG.

Mistral has also presented European banks and other institutions with its alternative to Anthropic's Mythos, an AI model designed to identify cybersecurity vulnerabilities. Chief Executive Officer Arthur Mensch described this capability as a national security risk last month. "We must have control over this technology," he said.

Previous investors in Mistral include France's state bank Bpifrance and US venture capital firms Lightspeed Venture Partners, General Catalyst and Andreessen Horowitz.