Stability AI looks to raise funds at $4B valuation

Stability AI’s Stable Diffusion competes with OpenAI’s Dall-E 2, another digital imaging tool that uses artificial intelligence. Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images

With artificial intelligence booming, one of the key players in the fast-growing space just reached unicorn status with a funding round late last year and is telling investors to raise more money. The parent company stable diffusion, an AI tool for creating digital images, is seeking funding at a valuation of about $4 billion, according to the people, who asked not to be identified because the information is private. It’s unclear how much Stability AI Ltd. is looking to raise in a potential round. No final decision has been made on whether to proceed with the fundraising, and the valuation is still subject to change.

London-based Stability, whose investors include Coatue Management and Lightspeed Venture Partners, recently raised $101 million at a valuation of around $1 billion, Bloomberg News reported in October. A representative for Stability AI declined to comment.

With technology sluggish and valuations much higher, the imminent return of artificial intelligence to the market means that in recent months artificial intelligence has become the hottest topic in Silicon Valley, with entertainment, finance and even emphasizes that it can subvert even education.

Microsoft invested $10 billion in ChatGPT’s parent company, OpenAI. OpenAI is a technology leader with tools that can generate highly detailed images, text, and other media with short prompts. LinkedIn co-founder Reid Hoffman said on Friday: he is stepping down from OpenAI’s board of directors as his venture capital firm increases investments in other AI companies.

Other tech giants such as Alphabet, Amazon.com and Meta Platforms are also vying for AI dominance.

Stable Diffusion competes with another digital imaging tool, OpenAI’s Dall-E 2. The way Stable Diffusion works is that the user enters a description of the image. For example, an astronaut riding a horse. The program spits out realistic or surreal images. The company says its open-source software is available to the public, which sets it apart from its competitors. Its practical uses include designing video game advertisements.