Jun 26, 2024 2 min read

Stability AI raises new finance, appoints Sean Parker as Chair

Cash-strapped AI company Stability has announced it has raised $80 million in new finance. It has also appointed Napster co-founder and early Spotify investor Sean Parker as Chair, who says the new cash will allow “the creation of even more powerful AI models”

Stability AI raises new finance, appoints Sean Parker as Chair

Stability AI, the London-based generative AI company, has secured a reported $80 million in new funding, after a chaotic year that saw its founders fall out with one another, the company run short of cash, and its CEO quit. 

The new injection of cash comes from both venture capital companies and a number of individuals. That includes Napster co-founder Sean Parker, who went on to become Facebook’s first President and an early investor in Spotify. Parker will become the company’s executive board chairman, a particularly interesting appointment given his experience of navigating major copyright challenges. 

Stability’s music product, Stable Audio, was trained with licensed music. However, the company’s more general position on its copyright obligations - and its insistence that training AI is fair use under US copyright law, meaning copyright owner permission is not required - prompted its VP Of Audio Ed Newton-Rex to quit the business last year. 

Meanwhile Stability’s core image generation product has been hit with legal action relating to alleged copyright infringement. 

The Stability board may well be looking to Parker for insight when it comes to the copyright issues. As a Napster co-founder he knows a lot about legal battles with copyright owners that can ultimately cause a business to collapse. However, as a former Spotify advisor, he also knows a thing or two about successfully working with big copyright owning corporations as a disruptive start-up. His fellow board members would presumably prefer the latter outcome.

“Stability AI has made a global impact by creating the leading generative image foundation models and fostering the largest ecosystem of generative AI media creators and developers”, says Parker. “This investment will enable the creation of even more powerful models and allow the community to continue pushing the boundaries of human creativity”.

Stability has enjoyed a high profile in the generative AI space ever since the release of its image-generating Stable Diffusion model in 2022. However, the company's financial position started to be a cause for concern for investors last year, with founder and CEO Emad Mostaque then departing in March this year. 

As well as the new finance, Stability has also appointed a new CEO, former Weta Digital boss Prem Akkaraju. He is also personally investing in the company alongside Parker and former Google CEO Eric Schmidt. Venture capital firms involved in the new funding round include Greycroft, Sound Ventures and Lightspeed Venture Partners

According to The Information, the investors have also reached a deal with Stability’s cloud providers and other suppliers to forgive about $100 million owed by the company and $300 million in future obligations. 

As well as the financial problems, Stability - like many generative AI companies - also has those ongoing legal problems. It is involved in one of the big legal battles centred on the copyright obligations of AI companies, filed in both the US and the UK by Getty Images. 

That lawsuit has yet to be decided, but with a raft of high-profile, tech-savvy investors newly backing the company, some might see this as an indication that those backers don’t regard the legal issues as having a significant impact on the future of the company.

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