AI infrastructure company Modal Labs is close to raising $750 million in a new funding round. The round is led by venture firm Accel, according to a source with knowledge of the deal.
The deal would value Modal at $15.75 billion, including the new investment. The size of the round had not been reported before, though Axios and Bloomberg have reported other details.
Modal Labs declined to comment on the funding.
Modal Labs Valuation Jumps in Four Months
The new round would more than triple Modal's valuation in a short time. Four months ago, the company announced a $355 million raise at a $4.65 billion valuation.
As of May, Modal had passed $300 million in annualized revenue. The company shared that figure with Reuters at the time.
Modal provides inference services. Inference is the process of running an AI model that has already been trained so it can produce outputs.
Demand for these services has been rising. Much of it comes from customers who use open-source models.
Other AI Inference Startups Seek Funding
Modal is not the only inference company raising money. Baseten is nearing a new funding round at a $26 billion valuation, Bloomberg reported. That would double its value from June.
Fireworks and Fal have also held talks with investors about new rounds at much higher valuations, according to The Information. Fal provides inference for video and image generation.
Fireworks said in July that its annualized revenue had reached $1 billion. That was five times higher than a year earlier.
Several inference startups are expected to reach that same revenue level by the end of the year, the source said. Still, profit margins are thin because buying or leasing computing power remains expensive.
Modal was founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna. Bernhardsson spent more than 15 years building data teams, including at Spotify, where he helped build its recommendation system. He also served as chief technology officer at online mortgage lender Better.com.
Bubna studied math and computer science at MIT. He was an early staff engineer at data-labeling startup Scale AI before starting Modal.
The New York-based company has about 150 employees. Its platform lets developers train AI models and run other heavy computing tasks without managing their own servers.
Customers listed on Modal's website include coding startup Cognition, AI music generator Suno, fintech firm Ramp and publishing platform Substack.
The funding talks come two months after Modal was linked to a closely watched AI security incident. In late July, Modal disclosed that a customer's data was compromised in a hacking campaign by a rogue OpenAI agent that also targeted Hugging Face.
Bubna said the problem came from a customer's own code. "We're aware a Modal customer published an unauthenticated endpoint that allowed anyone on the internet to use their sandboxes for code execution," he said at the time.
"This was used by the rogue agent. Modal's platform was not compromised in any way," Bubna added.
The Accel-led round has not been officially announced, and Modal has not confirmed its final terms.
