Stability AI said on Tuesday it has raised funds and appointed industry veteran Prem Akkaraju as its top boss, months after the exit of founder and CEO Emad Mostaque compounded troubles at the cash-strapped generative AI startup.

The firm has raised about $80 million in funding, according to a person familiar with the matter, from a group of investors including Coatue Management, Lightspeed Venture Partners and former Google CEO Eric Schmidt.

New CEO Akkaraju, former chief of visual effects company Weta Digital, has also invested in the company, which makes an artificial intelligence image-generation tool that rivals those made by Google and OpenAI.

Stability AI, which has also released AI models to generate audio and video using text prompts, named former Facebook President Sean Parker as executive board chairman of its board.

Greycroft cofounder Dana Settle, General Partner of Coatue Management Colin Bryant and Akkaraju were also added to Stability AI's board.

The investors have reached a deal with Stability AI's cloud providers and other suppliers to forgive about $100 million owed by the company and $300 million in future obligations, The Information reported on Tuesday citing a person involved in the deal.

The company raised $101 million in a seed round led by Coatue Management and Lightspeed Venture Partners at a $1 billion dollar valuation in 2022, but has since been struggling to raise additional funds due to the lack of a business model.

Mostaque stepped down as the CEO of Stability AI and from its board in March to pursue decentralized AI. A month later, the company, which had nearly 200 employees, said it laid off some staff as part of a restructuring process.

(Reporting by Akash Sriram in Bengaluru and Krystal Hu in New York, additional reporting by Harshita Meenaktshi; Editing by Shinjini Ganguli)