Stability AI, the struggling generative AI startup behind Stable Diffusion, has raised recent money. But it just isn’t revealing how much.
Greycroft, Coatue Management, Sound Ventures, Lightspeed Venture Partners, O'Shaughnessy Ventures and angel investors Prem Akkaraju, ex-Google CEO Eric Schmidt, Robert Nelsen and Napster founder and ex-Facebook executive Sean Parker have injected fresh capital into Stability, the corporate announced Tuesday morning. Parker has joined Stability AI as chairman of the board and now sits on the corporate's board alongside Greycroft managing director Dana Settle, Coatue Management COO Colin Bryant and Akkaraju – who was named CEO of Stability.
“Stability AI has made a world impact by creating the leading generative image foundation models and fostering the most important ecosystem of generative AI media creators and developers,” Parker said in an announcement. “Innovation happens on the intersection of art and technology: the corporate's world-class research and applied AI teams collaborate with a vibrant community of AI artists, modelers and developers who’ve ingeniously prolonged the capabilities of the corporate's core models.”
The announcement was anticipated earlier this week by The Information, which revealed in a transient report that Stability AI was near a cope with VCs because it faces a liquidity crisis and unpaid cloud bills. Both The Information and Reuters reported that the fundraiser may lead to a lower valuation of the startup; Stability AI declined to comment.
Stability rose to prominence in 2022 after the discharge of Stable Diffusion, an image-generating AI model developed at Ludwig Maximilian University in collaboration with AI startup Runway. Stability delivered updates to the open-source model and built services around it, eventually commercializing it and making Stable Diffusion one of the widely used open image-generating models today.
In the years that followed, Stability's ambitions grew and the startup ventured into numerous areas, including code, text, doodling, music, sound, 3D model and video generation, and even biomedical research. But the corporate's co-founder and former CEO, Emad Mostaque, reportedly led Stability to financial disaster through poor management, resulting in staff resignations, a partnership with Canva falling apart, and investors worrying about Stability's prospects.
stability had only $4 million within the bank last Octoberin line with reports – a far cry from the over $100 million in capital it raised within the years that followed from investors like Intel – and it was expected to generate only $11 million in revenue in 2023. At the identical time, the corporate needed to spend $99 million a yr renting cloud infrastructure from AWS, Google Cloud and CoreWeave to coach and run its models, in addition to $53 million in operating costs and wages.
In December, Stability switched to a subscription model for industrial use of its technology, with prices starting at $20 monthly. The company was also considering reselling its computing resources as a managed service, in line with reporting – and sells itself at Lightspeed’s urging.
Mostaque left the corporate in March under pressure from investors.
Stability’s recent investors, including Schmidt, have pledged $80 million to effectively take over Stability; struck a cope with the startup's suppliers to forgive about $100 million in debt; and negotiated to have Stability released from $300 million in future obligations, most of which were to go to cloud infrastructure providers, in line with the Wall Street Journal.
It is unclear where Stability goes from here. Key talent, including several researchers behind the event of Stable Diffusion, in addition to Ed Newton-Rex, who led Stability's generative AI audio efforts, have left the corporate. And Stability is facing several Lawsuits for copyright infringement filed by image provider Getty Images and other artists claiming their works were used without permission to coach the unique stable diffusion.
Akkaraju's experience in visual effects could inform Stability's future client acquisition strategy; Akkaraju previously served as CEO of Weta Digital, the FX company behind the digital effects in movies comparable to “Avatar” and the “Lord of the Rings” trilogy. Parker says Stability will deal with constructing out its managed image, video and audio pipelines and workflows, developing custom enterprise models and content production tools, and providing APIs for consumer apps for art, graphic design, social media and gaming.
Wherever Stability's future takes it, Parker guarantees the corporate 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 good thing about the whole community,” he said. “The market opportunity in generative media – from images to video and 3D to speech and music – is just starting… This investment will enable the creation of much more powerful models and enable the community to proceed to push the boundaries of human creativity.”
