Stability AI, Facing Cash Crunch, Discusses Sale

Stability AI, which has emerged as a poster child for investors’ rush to back unproven artificial intelligence startups, has talked to at least one potential buyer in recent weeks about a sale as its faces a cash crunch, according to a person involved in the conversations.

The four-year-old startup raised at least $101 million from marquee investors including Coatue Management and Lightspeed Venture Partners. It fetched a $1 billion valuation in 2022 on early fanfare for Stable Diffusion, an open-source AI image generator it helped fund. The company also forged business ties with Amazon Web Services and other established technology companies. But making money from its free software proved difficult, especially as rivals such as OpenAI and Midjourney emerged.