Stable Diffusion to live on: Stability AI confirms rescue deal and new CEO

While Stability AI’s latest image-generating model, Stable Diffusion 3, may have been a success, things behind the scenes at the company have been slightly more turbulent. However, with today’s funding announcement, it seems the immediate financial woes may be over for the time being.

Following the departure of founder and CEO Emad Mostaque in March after allegations of mismanagement and what Fortune termed an “investor mutiny,” sources close to the company reported last month that Stability AI was considering a sale. (For the record, Mostaque himself said he left to pursue “decentralised AI.”)

How close they came to going through with that sale we might never know. This afternoon, Stability AI announced that the company had secured “significant new investment” from a group of backers, albeit of an undisclosed amount.

The knights in shining AI armour include Greycroft, Coatue Management, Sound Ventures, Lightspeed Venture Partners, and O’Shaughnessy Ventures. The list also includes tech executives such as Sean Parker, Eric Schmidt, Robert Nelsen, and entertainment and technology exec Prem Akkaraju.

The latter will also become the CEO at Stability, stating that the startup’s world-class team, breakthrough models, and unique developer network attracted him to take on the role.

“We will continue to release the most cutting-edge open models for the community, while meeting the overwhelming demand for AI solutions from large-scale corporations,” Akkaraju said. “Additionally, Stability AI is now in an ideal position to spearhead the real convergence of generative AI and studio content.”

The highs and lows of Stability AI

Founded in 2019, Stability AI soon became an early frontrunner in the generative AI race, reaching unicorn status in 2022. Its image-generating models have proved incredibly popular. Its flagship model, Stable Diffusion, has over 150 million downloads on open-source platform Hugging Face.

However, as with several GenAI companies, it has also become the target of lawsuits from artists who feel their work has been exploited. Furthermore, massive costs associated with renting GPUs from cloud service providers soon saw the company in dire financial straits. It remains to be seen if the “significant” new cash injection and new leadership will be enough to stabilise things at Stability.

Beyond text-to-image

Beyond image-to-text models, Stability AI has also released Stable Vicuna, the “world’s first open source RLHF LLM chatbot,” video generating Stable Video Diffusion, and two audio generating models: Stable Audio 2.0 an Stable Audio Open. It also has its own family of multilingual LLMs.

Former President of Facebook, Sean Parker, will be joining the board as Executive Chairman. “I’m committed to the open-source principles that Stability AI was built upon,” Parker said. “These principles have made Stability AI’s open models the most widely used foundational AI image models globally. 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.”