Modal Labs approaches $750 million funding round at $15.75 billion valuation

AI inference infrastructure provider Modal Labs is nearing a $750 million funding round led by Accel. The transaction values the company at $15.75 billion, including the new investment.

This proposed round more than triples Modal’s valuation from the $4.65 billion figure recorded just four months prior, when the company announced a $355 million fundraise. The rapid valuation growth reflects soaring market demand for inference services, particularly from customers deploying open-source models.

Market Context

Other inference startups are also pursuing fresh capital at elevated valuations. Baseten has approached capital infusions targeting a $26 billion valuation, while firms like Fireworks and Fal have engaged investors regarding rounds that would substantially increase their market standing.

Despite rapid revenue growth across the sector, profit margins remain narrow. High costs associated with acquiring and leasing compute infrastructure continue to weigh on providers. Fireworks reported an annualized revenue of $1 billion in July, and multiple inference-focused startups are projected to reach the same milestone.

Company Background

Modal was founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna. Bernhardsson previously built data teams at Spotify and served as CTO at Better.com. Bubna studied mathematics and computer science at MIT and worked as an early staff engineer at Scale AI.

Based in New York with approximately 150 employees, Modal enables developers to train artificial intelligence models and execute compute-heavy workloads without managing physical servers. Its client base includes Cognition, Suno, Ramp, and Substack. As of May, the company surpassed $300 million in annualized revenue.