It's unclear which investors Mistral has spoken to about a new funding round, the report said, citing a person with direct knowledge of the matter.

Mistral's existing investors include Andreessen Horowitz, Lightspeed Ventures and Microsoft Corp, which has also backed AI startup OpenAI.

Mistral did not immediately respond to a Reuters request for comment outside of regular business hours.

In February, Microsoft invested $16 million in Mistral and partnered with them to make its artificial intelligence models available through its Azure cloud computing platform.

The partnership provoked scrutiny from the European Union, with lawmakers demanding an investigation into what they see as a concentration of power by the technology giant.

The startup, which has just recently begun to generate revenue, in December raised $415 million, the report added. Mistral was last valued at 2 billion euros in a funding round in December.

(Reporting by Angela Christy in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich)