British AI startup Stability AI, known for its image generator Stable Diffusion, is in discussions with potential buyers of the company. The sale initiative comes amid increasing pressure from investors, particularly Coatue Management, who have raised concerns about the company’s financial health.
London-based startup Stability AI, known for its generative AI model Stable Diffusion, has been actively looking for a buyer in recent weeks. This comes against the backdrop of increasing pressure from investors, particularly Coatue Management, which is calling for the resignation of company boss Emad Mostaque. Coatue Management’s call for Mostak’s resignation comes a year after the company helped raise funding for Stability AI, valuing the startup at $1 billion.
Stability AI has held preliminary discussions with several potential buyers, but sources close to the situation warn that a deal is still a long way off and the process could be halted at any time. At the same time, a representative of Stability AI emphasized that the company is focused on developing new products in the field of AI, including the video generation model Stable Video Diffusion, and is not seeking sales.
In August, the startup’s revenue was $1.2 million and is expected to rise to $3 million this month. However, the company’s monthly expenses for bills and salaries are $8 million. Last October, the startup received investments of around $50 million from Intel Company with the aim of further business development.
The relationship between Stability AI and its investors remains tense. Coatue Management’s general partner, Sri Vishwanath, resigned as a director due to Intel’s investment in Stability, as Coatue Management owns a significant stake in Intel competitor AMD. A partner at Lightspeed Venture Partners also resigned as an observer on the startup’s board.
Intel, in turn, named Stability AI the “anchor client” for its new AI-focused supercomputer in September. Intel’s investment was driven in part by its use of Intel processors in Stability AI computing, according to two sources familiar with the terms of the deal.