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Lightspeed Ventures Among Crypto VCs Raising Millions in Startup Stability.AI as Crypto Enthusiasm Wanes – DL News
- Cryptocurrency investors Coatue and Lightspeed Ventures have invested more than $7.3 million in Stability.
- Company documents show that the new CEO will earn $500,000 a year for four years.
In another sign that cryptocurrency venture capitalists are jumping on the bandwagon to explore the AI trend, the list of backers who pushed Stability.AI to its $80 million investment includes some big names in the cryptocurrency industry.
According to company documents seen by DL NewsLightspeed Ventures and Coatue participated in a round of funding, investing $2.4 million and $4.9 million, respectively.
Light speed has invested in some of the largest companies in the cryptocurrency industry, including Ripple, Solana, and Yuga Labs.
Coat has backed Chainalysis, CertiK, Dapper Labs, and other cryptocurrency companies. Both investment firms contributed funding to blockchain infrastructure startup Alchemy.
The investor list is a sign that as AI hype grabs headlines and pours money out of Silicon Valley, growth opportunities in the cryptocurrency space are increasingly rare.
Based in Los Angeles, Stability.AI is best known for Stable diffusiona technological model capable of transforming text messages into images.
Cryptocurrencies have no role in its design or operation.
Expanding focus on VC
“Many ‘crypto-only’ funds that have raised large amounts are finding it difficult to deploy funds exclusively within the cryptocurrency market,” said Eylon Aviv, a partner at cryptocurrency investment firm Collider. DL News. “As a result, they are expanding their focus to adjacent fields, of which artificial intelligence is a prime example.”
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Stability.AI has not only attracted cryptocurrency-focused funds.
Greycroft Partners has invested about $20 million, the filing reveals.
And Retspan, a fund backed by Sean Parker, a Silicon Valley investor and early Facebook executive, has invested nearly $12 million. A Parker representative declined to comment.
Eric Schmidt is also among the investors in Stability.AI, a source close to the former Google CEO confirmed DL News. The AI company touted Schmidt’s support for X this week.
In 2022, Stability.AI raised $101 million at an average cost of $101 million reported $1 billion valuation.
The filing dated June 25 shows that Stability.AI issued nearly 2 million shares worth about $51 million.
The company could sell another 3 million shares for about $29 million.
As part of the financing, Prem Akkaraju has been appointed as CEO for a four-year term.
According to the documents, he will earn a base salary of $500,000 a year.
VCs Cool Off on Cryptocurrencies
This round marks a shift in VC focus towards AI strategies, away from blockchain-based startups.
Stability.AI has 270,000 users on its Discord server and has created over 400 million images. It can also create audio and video based on user requests.
The arrival of applications like Stable Diffusion and OpenAI’s ChatGPT app has captured the imagination of investors. OpenAI’s valuation is reportedly more than $80 billionaided by a $10 billion investment from Microsoft in 2023.
According to separate filings, Lemniscap, a Cayman Islands-based firm specializing in crypto startups, has invested $2.3 million across three entities in Stability.AI. It has also backed Avalanche and Algorand, both layer-1 blockchain networks.
Lemniscap has invested more than $66,000 in Stability.AI through its Lemniscap Blockchain Fund.
Liam Kelly is a DeFi correspondent at DL News. Do you have any advice on elections? Please contact liam@dlnews.com.