> How is that far fetched? There are plenty of recent examples where investors didn’t do enough due diligence in projects seeking huge valuations.
Is there examples of investors investing in a project without even visiting the homepage of the project or trying to understand even 0.1% of what the project is about? I don't think it's super common, but maybe I'm not hanging around the right/wrong circles in SV.
> And why are you putting leaked pitch deck in quotes?
AFAIK, this is the only article that mentions a leaked pitch deck from Stability AI and it only includes one image, which puts into question if there really is a leaked pitch deck, or if it's just one image that got sent to them.
FOMO really is a thing. Mind you, this isn't all investors, but as a company you only need to find one that will sign. And that one might serve as validation to a bunch of others who might then want to be in on the round. It can get pretty crazy. At the same time, plenty of solid businesses that aren't hyped can't raise a round at any reasonable valuation. It really isn't a fair world.
The worst is when your solid business suddenly gets a competitor flush with capital which decides to start a price war, which, depending on the amount of capital they've got they may well win before they themselves go out of business.
The comparison would be if investors now suddenly say "Hey, we didn't know FTX were trading with cryptocurrencies, we don't like that!", not that things were hidden behind financials and corporate setups.
Even though the troubles of FTX were hidden behind financials, someone who would look deeper into it would spot issues for sure. But maybe not from a brief look, while in this case with Stability AI, no one didn't even do a brief look?
That line can be pretty fine. Not in the case of FTX but the perfect poison for any investor is a founder or a group of founders that are true believers but that are mistaken all the same. They don't actually know that they are misleading investors, it isn't deliberate but if it was you wouldn't be able to spot the difference.
> There are plenty of recent examples where investors didn’t do enough due diligence in projects seeking huge valuations.
Exactly. This reminds me of Fast.co [0] who recently shutdown after attempting to raise more VC capital when it was revealed that they only made 600K and with a very high burn rate.
I don't see how it is so difficult for many commenters here to see that investors were mislead by the claims made by Stability.ai's IP, and now they're also are burning cash with questionable revenues being generated whilst begging to VCs again to raise at a higher valuation.
Some of these investors just run into hype and get burned repeatedly and never learn from FOMO.
Assuming you have read the article (and its links), there is a video podcast which he claimed that 'his team' originally developed Stable Diffusion under Stability.ai without mentioning the original researchers that created the model, until they raised money which one of the researchers clearly mentions this in the article:
> “Once he had this money he became a bit clearer who actually developed Stable Diffusion and that his company did not own the IP,” he says. “Now we come to the interesting thing — if you’re running a company that’s raising a Series A and pushing for a lot of money and your VC guys realise that you don’t own any IP, that probably makes it a bit tricky.”
So according to the leaked Telegram message, the claim of millions of people or '5M' users using Stable Diffusion (for free) and DreamStudio which that itself is a paid SaaS and now they are running out of money [0] doesn't add up or seem to be very promising to Stability either way.
Just other typical VC cash in and burn as much money as possible for inflated numbers.
And why are you putting leaked pitch deck in quotes?