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### Stability AI, Backed by Intel Funding, Seeks Buyers Amid CEO Resignation Pressure

At the time of the deal, Stability was spending roughly $8 million a month on bills and payroll whi…

Stability AI, the British artificial intelligence startup known for the Stable Diffusion image generator, is considering selling the company due to mounting pressure from investors regarding its financial situation.

The London-based company has positioned itself as a potential acquisition target in recent weeks and has initiated preliminary discussions with various firms, as per sources familiar with the matter. These sources, who preferred to remain anonymous, mentioned that while talks are ongoing, a definitive deal is not on the immediate horizon, and Stability AI reserves the right to halt the process without selling.

The current developments highlight the growing discord between Stability AI, once a favored entity among venture capitalists, and some of its major investors. Notably, Coatue Management, a key investor, reportedly urged CEO Emad Mostaque to resign in a recent communication to the management team. This call for change comes merely a year after Coatue spearheaded a funding round that initially valued the startup at \(500 million, eventually leading to a \)1 billion valuation following additional funding rounds.

In response to inquiries about the potential sale, a Stability spokesperson clarified via email that while there is interest from multiple parties, the company’s primary focus remains on launching cutting-edge models, such as its latest video generation offering.

Addressing concerns raised by Coatue regarding the leadership under Mostaque, the Stability spokesperson emphasized the CEO’s pivotal role in the company’s achievements and expressed confidence in investors’ continued support amid a rapidly evolving market landscape.

Among the companies approached for a possible acquisition, Cohere, a Canadian startup specializing in AI technology for business applications, was one of the targets, although discussions did not progress further. Similarly, Jasper, an AI startup focused on marketing material creation, was also contacted by Stability AI.

Stability AI recently achieved unicorn status by raising $101 million in 2022, attracting investors with its software capable of generating captivating images based on minimal input. Despite its financial success, the company has faced scrutiny over tools like Stable Diffusion, which have been utilized to create controversial deepfake content.

With substantial investment inflows, including a significant contribution from Intel Corp., Stability AI is aggressively expanding its operations. However, the company’s expenditure currently surpasses its revenue, with reports indicating monthly expenses of around $8 million compared to revenue figures in the millions.

The tumultuous relationship with investors, internal management challenges, and executive compensation inquiries have added to the company’s recent struggles. Despite these hurdles, Stability AI continues to forge partnerships and secure investments, with Intel highlighting the startup as a key customer for its AI supercomputer initiative.

While navigating these complexities, Stability AI remains committed to its growth trajectory and technological advancements, ensuring its position in the competitive AI landscape.

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Last modified: February 12, 2024
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