Stability AI, the beleaguered AI startup behind Stable Diffusion, has raised fresh cash. But he won’t reveal how much.
Greycroft, Coatue Management, Sound Ventures, Lightspeed Venture Partners, O’Shaughnessy Ventures and angel investors Prem Akkaraju, former Google CEO Eric Schmidt, Robert Nelsen and Napster founder and ex-CEO of Facebook, Sean Parker, have injected new capital into Stability, the company. revealed on Tuesday morning. Parker has joined Stability AI as chairman of the executive board, joining Greycroft CEO Dana Settle, Coatue Management COO Colin Bryant and Akkaraju — who has been named CEO of Stability — on the company’s board.
“Stability AI is making a global impact by creating the leading image foundation models and empowering the largest ecosystem of AI production media creators and developers,” Parker said in a statement. “Innovation happens at the intersection of art and technology: the company’s world-class research and applied AI teams collaborate with a vibrant community of AI artists, modelers and developers who have intelligently extended the capabilities of the company’s core models.”
The announcement was discounted by The Information earlier this week, which revealed in a scoop that Stability AI was close to reaching a deal with VCs as it faces a cash crunch and unpaid cloud bills. Both The Information and Reuters reported that the fundraiser could lead to a lower valuation for the startup; Stability AI declined to comment.
Stability became known in 2022 after the release of Stable Diffusion, an image-generating artificial intelligence model developed at Ludwig Maximilian University in collaboration with startup AI Runway. Stability provided updates to the open source model and built services around it, eventually commercializing it and growing Stable Diffusion into one of the most widely used open imaging models today.
Stability’s ambitions grew over the next few years, and the startup ventured into a variety of fields, including code, text, doodles, music, audio, 3D modeling and video creation, and even biomedical research. However, the company’s co-founder and former CEO Emad Mostaque reportedly mismanaged Stability into financial disaster, leading staff to quit, a partnership with Canva to fall through, and investors to become more concerned about Stability’s prospects.
Stability he had just $4 million in the bank last Octoberper reports — a far cry from the more than $100 million in capital it raised over the next few years from investors including Intel — and was projected to make just $11 million in sales in 2023. Meanwhile, the company was on the hook for 99 million dollars a year in cloud infrastructure rentals from AWS, Google Cloud and CoreWeave to train and run its models, and $53 million in operating expenses and salaries.
By December, Stability had switched to a subscription model for commercial use of its technology with prices starting at $20 a month. The company also considered reselling its computing resources as a managed service, according to reference — and, at Lightspeed’s urging, sells himself.
Mosaque left in March after pressure from investors.
Stability’s new investors, including Schmidt, they have committed $80 million to effectively take over Stability; struck a deal with the startup’s suppliers to forgive about $100 million in debt. and negotiated to release Stability from $300 million in future liabilities that were largely earmarked for cloud infrastructure providers, according to the Wall Street Journal.
It’s unclear where Stability goes from here. Key talent, including several researchers behind the development of Stable Diffusion, as well as Ed Newton-Rex, who led Stability’s AI audio production efforts, have left. And Stability faces multiple claims for copyright infringement provided by photo supplier Getty Images and other artists, who claim their work was used without permission to train the original Stable Diffusion.
Akkaraju’s track record in visual FX may telegraph Stability’s client acquisition strategy going forward. Akkaraju was previously CEO of Weta Digital, the FX company behind the digital effects in films such as the “Avatar” trilogy and “The Lord of the Rings.” Parker says Stability will focus on developing managed image, video and audio pipelines and workflows, building custom business models and content production tools, and providing APIs to power consumer applications for art, graphic design, social media and gaming.
Wherever Stability’s future takes it, Parker pledges that the company will remain “committed to open source principles.”
“Our investment in Stability AI enables the continued development of open source, open access and open weight models for the benefit of the entire community,” he said. “The market opportunity in genetic media – spanning images, video, 3D, voice and music – is just beginning… This investment will enable the creation of even more powerful models and enable the community to continue to push the boundaries of human creativity ».
