Modal Labs Nears $15.75 Billion Valuation Amid Inference Surge
AI-generated image · US National Wire
A massive capital injection signals a shift toward the high-margin inference layer where AI models are deployed for creators and developers.
As TechCrunch first reported, Modal Labs, a provider of AI inference infrastructure, is nearing a $750 million funding round led by Accel. The deal would value the New York-based company at $15.75 billion, more than tripling its $4.65 billion valuation from a $355 million fundraise conducted just four months prior.
Founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna, Modal Labs allows developers to run compute-heavy workloads and train AI models without managing servers. The company's client list includes the publishing platform Substack, AI music generator Suno, coding startup Cognition, and fintech firm Ramp. As of May, Modal reported annualized revenue exceeding $300 million, TechCrunch reports via Reuters.
The funding surge comes as demand spikes for inference services—the process of running pre-trained models to generate outputs—particularly among users of open-source models. Other firms are seeing similar valuation jumps; Bloomberg reports Baseten is nearing a capital infusion at a $26 billion valuation. Additionally, The Information reports that Fireworks and image/video inference startup Fal have discussed new rounds to significantly increase their valuations. Fireworks previously announced in July that its annualized revenue reached $1 billion.
Despite rapid growth, TechCrunch notes that margins remain thin for these providers due to the high cost of leasing or acquiring compute. The fundraising also follows a July security incident where a customer's data was compromised. CTO Akshat Bubna stated the breach resulted from a flaw in a customer's own code rather than a compromise of Modal's systems.