An in-depth exposé, citing company documents and numerous insiders, reveals that the British AI firm’s astronomical infrastructure costs left it with a mere €3.51 million in reserve by October.
Stability AI, which rented its infrastructure from Amazon Web Services, Google Cloud Platform, and GPU-centric cloud operator CoreWeave, was reportedly shelling out a staggering €87.75 million annually. This is in addition to the €47.97 million in wages and operating expenses needed to keep the AI venture afloat1.
Adding to the company’s woes, it appears that a significant chunk of the cloud resources paid for by Stability AI were being freely given to anyone outside the startup interested in experimenting with Stability’s models. One external researcher cited in the report estimated that a now-cancelled project was provided with at least €2.22 million worth of computing over four months.
Stability AI’s infrastructure spending was not matched by revenue or fresh funding. The startup was projected to make just €9.71 million in sales for the 2023 calendar year. Its financials were reportedly so dire that it allegedly underpaid its July 2023 bills to AWS by €889,200 and had no intention of paying its August bill for €6.20 million1. Google Cloud and CoreWeave were also not paid in full, with debts to the pair reaching €1.40 million as of October1. This financial struggle, once a billion-dollar company, is a stark reminder of the challenges faced by even the most promising ventures in the AI industry.
The company, once valued at a billion dollars, reportedly considered delaying tax payments to the UK government rather than skimping on its American payroll and risking legal penalties. The failure was attributed to Mostaque’s inability to devise and execute a viable business plan.
The company's inability to secure deals with clients, including Canva, NightCafe, Tome, and the Singaporean government, is a testament to the challenges faced by AI startups in establishing and maintaining crucial partnerships.
Stability’s financial predicament spiralled, eroding trust among investors making it difficult for the generative AI darling to raise additional capital. According to the report, Mostaque hoped to bring in a €84.24 million lifeline at the end of last year but only managed to secure €44.46 million from Intel. Only €17.55 million of that sum was disbursed a significant shortfall given that the processor titan has a vested interest in Stability, with the AI firm slated to be a key customer for a supercomputer powered by 4,000 of its Gaudi2 accelerators. This struggle to secure additional funding highlights the precarious financial situation of Stability AI and the urgent need for support in the AI industry.
The report mentions further fundraising challenges, issues retaining employees, and copyright infringement lawsuits challenging the company’s prospects.