Stability AI looks to raise funds at $4B valuation as artificial intelligence captivates investors

With artificial intelligence booming, one key player in the fast-growing space is talking to investors about raising more money after just reaching unicorn status in a funding round late last year. 

The parent company of Stable Diffusion, an AI tool for making digital images, is seeking to raise money at a valuation of about $4 billion, according to people familiar with the matter, who asked to not be identified because it isn’t public. It isn’t clear how much capital Stability AI Ltd. is seeking to raise in the potential round. A final decision hasn’t been made on whether to go ahead with the financing and the valuation could still change, the people added. 

London-based Stability, whose investors include Coatue Management and Lightspeed Venture Partners, last raised $101 million at a valuation of about $1 billion, Bloomberg News reported in October. 

Representatives for Stability AI didn’t provide a comment.

That it’s going back to market so soon amid a tech downturn at a much richer valuation underscores how artificial intelligence in recent months has become the hottest topic in Silicon Valley, with the potential to upend entertainment, finance and even education. 

Microsoft Corp., Bloomberg News reported in January, is investing $10 billion in OpenAI, the parent of ChatGPT, a leader in the technology, with tools that can generate uncannily detailed pictures, text and other media with a short prompt. LinkedIn co-founder Reid Hoffman said Friday that he was stepping down from the board of OpenAI, as his venture capital firm increasingly invests in other AI companies.

Other tech giants including Alphabet Inc., Inc. and Meta Platforms Inc. are also competing to get out front in AI.

Stable Diffusion competes with OpenAI’s Dall-E 2, another digital-image tool.

The way Stable Diffusion works is that people type in a description of an image — say an astronaut riding a horse — and the program spits out a realistic or surrealistic picture. The company says it stands apart from competitors because its open-source software is available to the public. Its practical uses include designing video games to advertisements. 

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