Modal Labs, a startup focused on AI inference infrastructure, is reportedly in discussions to secure a new funding round that could value the company at approximately $2.5 billion, according to sources familiar with the matter. If successful, this funding would significantly increase the company's valuation from $1.1 billion, which was announced just under five months ago.
General Catalyst is reportedly in negotiations to lead this funding round. Modal's annualized revenue run rate (ARR) is estimated to be around $50 million, as per insider information. It's important to note that these discussions are still in the early stages, and the terms may evolve.
Both Modal and General Catalyst have not yet responded to requests for comments regarding this funding round.
Modal Labs is dedicated to enhancing inference, which involves executing trained AI models to provide answers to user inquiries. By improving inference efficiency, the startup aims to lower computing costs and minimize the delay between a user's request and the AI's response.
Modal is one of several companies in the inference space drawing significant interest from investors. Recently, its competitor Baseten raised $300 million at a valuation of $5 billion, more than doubling its previous valuation of $2.1 billion just months earlier. Similarly, Fireworks AI, another inference cloud provider, secured $250 million at a valuation of $4 billion in October.
In January, the team behind the open-source inference project vLLM transitioned to a VC-backed startup named Inferact, raising $150 million in seed funding led by Andreessen Horowitz at an $800 million valuation. Additionally, TechCrunch reported that the creators of SGLang have commercialized their project as RadixArk, which has secured seed funding at a $400 million valuation, led by Accel.
Modal Labs was co-founded in 2021 by CEO Erik Bernhardsson, who has over 15 years of experience in building and leading data teams at companies like Spotify and Better.com, where he served as CTO.
