Sean Parker Steps in to Save Stability AI with Emergency Funding as Losses Balloon

Sean Parker Stability AI
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Sean Parker Stability AI
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Photo Credit: Stable Diffusion / Stability AI

As startup Stability AI gains a new CEO, the company also gets emergency funding from a group of investors, including Sean Parker of Napster fame.

Though Stability AI successfully rode the generative artificial intelligence boom to the tune of a $1 billion valuation, the startup quickly turned belly-up after hemorrhaging finances and losing employees. Now the company has gained a new CEO and a bailout from a group of investors led by former Facebook President Sean Parker.

Prem Akkaraju, former CEO of visual effects company Weta Digital, will be stepping into Stability AI’s chief executive role. Akkaraju had been the CEO of Weta Digital since 2020, and is also the co-founder and executive chair of Screening Room. Alongside Akkaraju’s leadership, Stability AI will also receive a cash infusion from an investor group led by Sean Parker, best known as co-founder of Napster and the first president of Facebook.

News of Stability AI’s new lease on life comes after reports in May that the company had lost over $30 million in the first quarter of the year, with revenue of less than five million. At the time, the company was said to be seeking outside investment.

In addition to its main offering, Stable Diffusion 3 Medium, the latest version of its text-based image generator released on June 12, Stability AI has been diversifying its models beyond just image generation. Stable Audio 2.0 was released in April and enables users to generate up to three minutes of audio, while their latest version of Stable Video includes the ability to generate 3D video using text prompts.

Stability AI’s former CEO, Emad Mostaque, who founded the company in 2019, resigned back in March, after which its chief operating officer Shan Shan Wong and chief technology officer Christian Laforte have been acting as interim co-CEOs. Mostaque’s departure hinged on concerns from investors about the company’s financial viability in the face of numerous competitors and its overall business operations.

Since then, Mostaque has posted on the former Twitter that he is working on a new venture called Schelling AI. While not much is currently known about the endeavor, Mostaque says its aim is to help advance his vision for decentralized AI, and more information about the project will be revealed in July.