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Report: Stability AI Secures $50 Million in Financing

Stability AI, the artificial intelligence (AI) startup recognized for its Stable Diffusion image-generating software, has reportedly raised about $50 million in financing.

This cash infusion was obtained through a convertible note, Bloomberg reported Thursday (Nov. 9), citing unnamed sources.

Reached for comment by PYMNTS, a Stability AI spokesperson said in an emailed statement: “Due to our unique position, we have received repeated interest over the last few months in fundraising from both major venture capital and strategic investors. We will be making announcements in this regard soon.”

The cash infusion arrives at a crucial juncture for Stability AI, which has recently encountered several challenges, according to the Bloomberg report.

The company has witnessed a turnover of senior personnel, including the head of human resources, and experienced disagreements with certain board representatives, the report said. One major backer reportedly expressed concerns regarding the leadership of Stability AI’s CEO, Emad Mostaque, and contemplated the addition of a co-CEO or president.

In addition, Stability AI has faced a lawsuit from co-founder Cyrus Hodes, who alleged that he was deceived into selling his shares at a low valuation just before Stability AI achieved a billion-dollar valuation milestone, per the report. Stability AI has disputed these claims.

The firm is also among the several AI companies that have been sued by copyright owners for using their work in AI training.

Stability AI expresses optimism about its future prospects, according to the report. The company asserts that employee turnover is a normal occurrence within the startup ecosystem and emphasizes the value it places on the guidance and expertise of its board members. Stability AI further highlights its remarkable revenue growth, citing a tenfold increase over the past year, with projections indicating further revenue expansion by year-end as it unveils additional products.

In the statement provided to PYMNTS, the Stability AI spokesperson said: “Stability AI is in a strong, healthy position to continue its world-leading work in generative AI. We’ve increased revenues tenfold over the last year and we’re on target to increase them further by the end of year as we continue to roll out new products. We are the only independent, open source, multimodal (image, language, code, 3D, audio) AI company in the world.”