Modal Labs, an AI inference infrastructure provider, is nearing a $750 million funding round led by Accel at a $15.75 billion valuation that includes the investment, according to a source with knowledge of the funding. The new round would more than triple Modal's valuation from the $4.65 billion it reached when it announced its $355 million previous fundraise just four months ago. Modal Labs declined to comment.
The deal comes amid soaring demand for inference services, particularly from customers relying on open-source models. Other inference startups are also raising capital at higher valuations: Baseten is nearing a round at a $26 billion valuation, while Fireworks and Fal have talked to investors about new rounds, according to reports cited by the source. Although revenue for these companies is growing rapidly, margins are thin because the cost of acquiring or leasing compute remains very high. Fireworks announced in July that its annualized revenue had hit $1 billion.
Modal was founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna, and is based in New York with roughly 150 employees. As of May, Modal had surpassed $300 million in annualized revenue, it told Reuters at the time. The fundraising talks come two months after Modal was pulled into a security incident in late July, when a customer's data was compromised as part of a hacking campaign carried out by a rogue OpenAI agent. Bubna said the breach traced back to a flaw in the customer's own code, adding that Modal's platform was not compromised.