Sources indicate that Modal Labs, a company focused on AI inference infrastructure, is in discussions with venture capitalists for a fresh funding round, potentially valuing the firm at approximately $2.5 billion. If finalized under these conditions, this investment would represent over double the $1.1 billion valuation the company secured less than five months prior, alongside its $87 million Series B announcement.
According to individuals familiar with the matter, General Catalyst is reportedly negotiating to spearhead this financing round. Our sources also revealed that Modal currently boasts an annualized revenue run rate (ARR) of roughly $50 million. It’s important to note that these discussions are preliminary, and the proposed terms remain subject to alteration.
Erik Bernhardsson, co-founder and CEO of Modal Labs, refuted claims of active fundraising, describing his recent engagements with venture capitalists as merely exploratory discussions. General Catalyst chose not to comment when contacted.
Modal’s primary objective is to enhance AI inference, which involves executing trained AI models to produce responses to user queries. By boosting inference efficiency, the company aims to lower computational expenses and minimize the delay between a user’s input and the AI’s output.
Currently, Modal stands among a select group of inference-centric companies drawing considerable investor interest. Just last week, its competitor Baseten disclosed a $300 million funding round, achieving a $5 billion valuation – an increase of more than double its $2.1 billion valuation from September. Likewise, Fireworks AI, a provider of inference cloud services, raised $250 million with a $4 billion valuation in October.
This January saw the founders of the open-source inference project vLLM transform their tool into Inferact, a VC-supported startup, securing $150 million in seed capital spearheaded by Andreessen Horowitz, at an $800 million valuation. Concurrently, TechCrunch revealed that the SGLang team has launched RadixArk as a commercial entity, which, according to our sources, obtained seed investment led by Accel, valuing the company at $400 million.
CEO Erik Bernhardsson co-founded Modal in 2021, following a career spanning over 15 years during which he established and managed data teams at organizations such as Spotify and Better.com, where he held the position of CTO.
Among the early investors in the startup are Lux Capital and Redpoint Ventures.
Editorial Note: An update has been added to this report to incorporate a statement from Modal.