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Stability AI, the embattled generative AI startup behind Stable Diffusion, has raised new funding, though the amount has not been disclosed.
Greycroft, Coatue Management, Sound Ventures, Lightspeed Venture Partners, O’Shaughnessy Ventures, angel investor Prem Akkaraju, Napster founder Sean Parker, Eric Schmidt and Robert Nelsen have infused new capital into Stability, the company said in a press release Tuesday morning. Parker will become chairman of Stability AI’s board of directors and join Greycroft managing partner Dana Settle, Coatue Management COO Colin Bryant and Akkaraju, who has been appointed CEO of Stability, on the company’s board of directors.
“Stability AI has impacted the world by creating cutting-edge generative image foundation models and cultivating the largest ecosystem of generative AI media creators and developers,” Parker said in a statement. “Innovation happens at the intersection of art and technology. Our world-class research and applied AI teams collaborate with a vibrant community of AI artists, model builders, and developers who have creatively expanded the capabilities of our core models. This investment will enable the creation of even more powerful models, allowing our community to continue pushing the boundaries of human creativity.”
The announcement was pre-empted by The Information. Earlier this weekThe Information reported that Stability AI is close to reaching an agreement with investors amid a cash crunch and unpaid cloud bills. Reuters Reports said the funding could lower the startup’s valuation, but Stability AI declined to comment.
Stability came into the spotlight in 2022 following the release of Stable Diffusion, an image-generative AI model developed by Ludwig Maximilian University in collaboration with AI startup Runway. Stability provided updates to the open-source model, built a service around it, and eventually commercialized it, which has helped Stable Diffusion become one of the most widely used open image-generative models today.
Over the next few years, Stability’s ambitions grew, with the startup expanding into areas such as music, sound, 3D model and video generation, and even biomedical research. But the company’s co-founder and former CEO, Emad Mostaque, reportedly led Stability to financial collapse through mismanagement, which resulted in staff resignations, a failed partnership with Canva, and investors growing increasingly wary of Stability’s future.
Par ReportsStability had just $4 million in the bank last October, a far cry from the more than $100 million it had raised from investors including Intel, and projected revenue of just $11 million in 2023. Meanwhile, the company was paying $99 million a year to rent cloud infrastructure from AWS, Google Cloud and CoreWeave to train and run its models, and $53 million in operating and staff costs.
By December, Stability had pivoted to a subscription model for commercial use of its technology, starting at $20 per month. The company was also considering reselling computing resources as a managed service, the person said. report — and then, at Lightspeed’s urging, sold itself.
according to According to The Wall Street Journal, Stability’s new investors, including Schmidt, have negotiated deals with suppliers to forgive about $100 million in debt owed by Stability and free the startup from $300 million in future debt that was due primarily to cloud service providers.
It’s unclear what the future holds for Stability: key personnel have left, including several researchers who worked on Stability Diffusion and Ed Newton-Rex, who led Stability’s generative AI audio efforts, and the company is facing multiple copyright infringements. Infringement lawsuits In a lawsuit filed by stock photo vendor Getty Images and other artists, they claim that their work was used without permission in Stable Diffusion training.
Akkaraju’s visual FX background may hint at Stability’s customer acquisition strategy going forward. Akkaraju was previously CEO of Weta Digital, the FX company that worked on digital effects for films such as “Avatar” and “The Lord of the Rings” trilogy. Parker said Stability will focus on expanding its managed image, video and audio pipelines and workflows, building custom enterprise models and content creation tools, and offering APIs to power consumer apps for art, graphic design, social media and gaming.
Whatever Stability’s future holds, Parker vows the company will “remain true to open source principles.”
“Our investment in Stability AI will enable the continued development of an open source, open access, open weighted model for the benefit of the entire community,” he continued. “The market opportunity for generative media, spanning images, video, 3D, audio and music, is only just beginning.”