Stability AI Explores Sale as Investor Urges CEO to Resign
Stability AI, the British artificial intelligence startup behind the Stable Diffusion image generator, has explored selling the company as management faces increased pressure from investors over its financial position.
The London-based firm has presented itself as an acquisition target in recent weeks, and held early-stage conversations with multiple companies, according to several people familiar with the matter, who asked not to be identified because the discussions were private. A deal is not imminent and the company could cut the process short without selling, they said.
The overtures underscore escalating tensions between Stability, once a venture capital darling, and some of its largest investors. Coatue Management called for Chief Executive Officer Emad Mostaque to step down in a letter to management last month, some of the people said. The demand came just a year after Coatue led a funding round that initially valued the startup at $500 million, according to a person familiar with the deal. Stability secured more funding for the round that ultimately led to a $1 billion valuation.
“While several parties have expressed interest in the purchase of Stability AI, we are not trying to sell the company and are focused on releasing leading models,” such as its recent video generation product, a spokesperson for Stability said by email.
Coatue wrote that Mostaque's leadership had prompted several senior managers to leave and placed the startup in a tenuous financial position, according to the people.
“Our CEO's leadership and management has been instrumental to Stability's success,” the Stability spokesperson said. “Recent investment underscores the confidence that investors have in Stability in this fast-growing market.”
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