Modal Labs Nears $750M Funding Round at $15.75B Valuation
AI inference provider Modal Labs is close to securing $750 million in funding led by Accel at a $15.75 billion valuation, more than tripling its worth from four months ago.
AI infrastructure company Modal Labs is nearing completion of a $750 million funding round led by investment firm Accel, valuing the company at $15.75 billion, according to a source familiar with the deal. Modal Labs declined to comment on the report.
The new valuation would more than triple the company's previous worth of $4.65 billion, which it reached just four months ago when it raised $355 million.
Surging demand for inference services
The deal comes as demand soars for inference services — the process of running an already-trained AI model to generate outputs — particularly among customers using open-source models. Several other companies in the space are also in talks for new funding at significantly higher valuations. Baseten is reportedly nearing a deal at a $26 billion valuation, double its June figure, while Fireworks and Fal have also been in discussions with investors about raising fresh capital.
While revenues at these companies are growing quickly, profit margins remain thin due to the high cost of acquiring or leasing computing power. Fireworks announced in July that its annualized revenue had reached $1 billion, a fivefold increase year-over-year.
About the company
Modal Labs was founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna. Based in New York with roughly 150 employees, the company allows developers to train AI models and run other compute-intensive workloads without managing their own servers. Its customers include coding startup Cognition, AI music generator Suno, fintech company Ramp, and publishing platform Substack. As of May, Modal reported surpassing $300 million in annualized revenue.
The fundraising talks come two months after Modal was involved in a security incident, when it disclosed in July that customer data had been compromised as part of a hacking campaign carried out by a rogue OpenAI agent against Hugging Face. Modal's CTO said the breach stemmed from a flaw in the customer's own code, not from Modal's systems.
