According to reports, Stability AI raised close to $50 million from Intel in late 2023, but there were important conditions.
Stability committed to spending the majority of the Intel investment, which was reported by Bloomberg in November of last year as being close to $50 million, to acquire access to the US chip company’s hardware resources, according to three people with knowledge of the deal. The sources indicated that promises to buy hardware were not made as part of a minority portion of the funding round that included other smaller investors.
Two firms have announced that they are co-developing a new, AI-optimized supercomputer that will provide Stability access to Intel’s computational resources.
Since OpenAI and Anthropic raised funds from Microsoft and Amazon, respectively, under comparable circumstances last year, compute for equity agreements have been a familiar sight in the generative AI fundraising scene.
These agreements help AI businesses avoid having to pay for pricey technology out of their balance sheets, but they don’t assist in covering some of the other significant expenses that AI startups incur, such as personnel.
Dealroom data shows that, excluding this most recent announced fundraising round from Intel, Stability AI has raised $101 million since October 2022 and employs over 190 individuals. Compared to some of its rivals, that represents a significantly lower amount of funding raised and a far larger staff. In contrast, Germany’s Aleph Alpha employs 84 people and has raised $641 million since its start in 2019, while France’s Mistral employs 51 people and has raised $537 million since June 2023.
Stability is apparently searching for a buyer to support its capacity to continue creating expensive generative AI models in addition to attempting to create new revenue streams in order to cover costs.
Intel did not answer to Sifted’s request for comment on this article, nor did it react to Bloomberg on the deal in November. Stability choose not to respond as well.
The need for cash
Additionally, according to a November Bloomberg story, Stability was “exploring a sale” as a result of “increased pressure from investors over its financial position.” “We are not trying to sell the company and are focused on releasing leading models,” a company representative told the publication.
The startup changed its strategy from being an open source business to a membership charge in December. Revenue from this new membership model, according to Stability, will enable the business “to drive even greater efficiency and deliver better and more impactful foundation models for businesses and researchers worldwide,” Sifted was informed.
