AI inference startup Modal Labs in talks to raise at $2.5B valuation, sources say
Source: TechCrunch
Image Credits: Khanchit Khirisutchalual / Getty Images
Funding round
Modal Labs, a startup specializing in AI inference infrastructure, is in the process of raising a new round at a valuation of about $2.5 billion, according to four people with knowledge of the deal. If the terms hold, the round would more than double the company’s valuation of $1.1 billion announced less than five months ago.
General Catalyst is in talks to lead the round, the sources told TechCrunch. Modal’s annualized revenue run rate (ARR) is approximately $50 million. The discussions are early, and terms could still change.
Modal and General Catalyst did not respond to requests for comment.
Industry context
Model is focused on optimizing inference—the process of running trained AI models to generate answers from user requests. Improving inference efficiency reduces compute costs and shortens the lag time between a user’s prompt and the AI’s response.
Modal is one of a handful of inference‑focused companies attracting intense investor attention:
- Baseten announced a $300 million raise at a $5 billion valuation, more than doubling its September valuation of $2.1 billion.
- Fireworks AI, an inference cloud provider, secured $250 million at a $4 billion valuation in October.
- In January, the creators of the open‑source inference project vLLM spun out a VC‑backed startup, Inferact, raising $150 million in seed funding led by Andreessen Horowitz at an $800 million valuation.
- TechCrunch reported that the team behind SGLang commercialized as RadixArk, securing seed funding at a $400 million valuation led by Accel.
Company background
Modal was co‑founded by CEO Erik Bernhardsson in 2021 after more than 15 years building and leading data teams at companies including Spotify and Better.com, where he served as CTO.
The startup counts Lux Capital and Redpoint Ventures among its earlier backers.