Stability AI secures $50M with Intel backing

Artificial Intelligence startup Stability AI recently secured funding led by chipmaker Intel Corp. in a financial boost for the company, which is primarily known for its Stable Diffusion image-generating software.

• Funding Details: The funding, nearly $50M, was raised through a convertible note in a deal that was closed in October. The funding comes after Intel announced a build of an AI supercomputer, employing its processors paired with 4000 Gaudi2 AI processors, with Stability AI named as an "anchor customer".

• Stability Status: The company has recently seen several senior employees depart, including the head of human resources amid disagreements with some board representatives and concerns about the leadership of CEO Emad Mostaque. Major backer Coatue Management had raised issues with Mostaque’s leadership and had sought to install a co-CEO or president.

• Partner Departure: Coatue General Partner Sri Viswanath, who was on Stability AI’s board, did not attend a board meeting, instead sending a lawyer in his stead. Another investor, Gaurav Gupta of Lightspeed Venture Partners, also left his role as a board observer at Stability AI over differences of opinion with management.

• Growth: Despite hitting growth snags after the announcement of a $101M seed round, valuing it at $1B, Stability has reported a tenfold increase in revenue over the last year and expects further growth by year-end.

• Company Expense: The company is currently spending millions per month on expenses such as computing costs and worker salaries, with reported outflows of $8M on a monthly basis.

Despite controversies, including a lawsuit by a co-founder alleging he was tricked into selling his shares cheaply, CEO Mostaque remains positive about the company's future.