According to the media, last month Coatue Management, the main investor in StabilityAI, was worried about the company's financial situation and sent a letter to the management calling for the resignation of the CEO and requesting the salary details of the CEO and other senior executives. The management is facing increasing pressure from capital, so it is considering selling and has negotiated with many companies in recent weeks.
Following the OpenAI "Gongdou", another star startup in the field of artificial intelligence (AI) - StabilityAI, which developed the popular text generation image model StableDiffusion, also went into trouble.
On Wednesday, the 29th, Eastern Time, the media quoted insiders as saying that because investors are dissatisfied with the company's financial situation and management is facing increasing pressure from investors, StabilityAI is considering selling. In recent weeks, it has behaved like an acquisition target and has held preliminary discussions with a number of companies, including two AI unicorns - Canada's Cohere and the United States' Jasper. The StabilityAI deal won't happen anytime soon, and it's possible the financing deal will end up without a sale.
According to the above-mentioned people familiar with the matter, the above-mentioned "selling out" action highlights that at the end of last month, one of the investors, Coatue Management, was worried about StabilityAI's financial situation and sent a letter to the management, calling for the resignation of StabilityAI CEO Emad Mostaque and requesting the salary details of Mostaque and other executives. Since then, the relationship between the company and some major investors has become increasingly tense. Coatue's letter led to the departure of several StabilityAI executives, leaving the company in a position of apparent financial weakness.
A spokesperson for StabilityAI has since said that there has been recent interest in acquiring the company, but the company is not trying to sell and is focused on releasing industry-leading models. A CEO's leadership and management play an important role in a company's success. The recent investment highlights investor confidence in the company in this fast-growing market.
StabilityAI was founded in 2019 and announced in October last year that it had received US$101 million in financing. One of the leading investors was Coatue. The media said that month that after the completion of this round of financing, StabilityAI’s valuation reached approximately US$1 billion, thus promoting it to an AI unicorn.
However, the financing of over 100 million US dollars is a drop in the bucket for StabilityAI, which has been criticized for burning money like crazy before. Training AI models inherently requires a large investment. Mostaque once revealed on social media that 256 A100 graphics cards were used for StableDiffusion, with a total of 150,000 hours of training, and a market cost of US$600,000.
Moreover, in the past few years, in order to build its own ecosystem, StabilityAI has been funding several AI research communities. In March this year, it also acquired the image generation company InitML. Also in March, some media learned that StabilityAI was seeking new financing, with the company valued at approximately US$4 billion.
Earlier this year, the media broke out about StabilityAI’s management chaos, saying that some employees at the company had lost confidence in Mostaque’s leadership style. Mostaque previously worked as a hedge fund analyst and has no background in AI research or even scientific research experience. However, he likes to give AI research a high degree of freedom, allowing the use of expensive cloud services for a limited time without supervision, and sometimes suddenly stepping in to take over a project.
In October this year, StabilityAI reportedly received US$50 million in convertible debt financing, led by Intel. At that time, some media said that the funding came at the right time. StabilityAI had just lost many senior employees, including the director of human resources, and there were differences between the company and some representatives of the board of directors. The large investor Coatue had objections to the leadership and had sought to add a co-CEO or president.
Intel's investment is said to depend in part on whether StabilityAI will use Intel processors for its computing in the coming months. In September this year, Intel called StabilityAI its "major customer" in the field of new AI supercomputers.
Some media pointed out that the relationship between StabilityAI and investors is chaotic. It is said that because Intel has invested in StabilityAI and Coatue has a large stake in Intel's rival AMD, Coatue's general partner Sri Viswanath no longer serves as a director of StabilityAI. It was reported earlier this month that a partner at Lightspeed Venture Partners resigned as a board observer at StabilityAI.
On Wednesday, a spokesperson for StabilityAI said that although it did not disclose details of cooperation with partners, the funds received by the company are not dependent on any specific hardware or cloud services so far.