Modal Labs in Talks with VCs for $2.5 Billion Valuation
Modal Labs, a startup specializing in AI inference infrastructure, is reportedly in discussions with venture capitalists for a new funding round at a valuation of approximately $2.5 billion. This potential deal would represent a significant increase from the company’s previous valuation of $1.1 billion announced just a few months ago.
According to sources familiar with the matter, General Catalyst is said to be leading the round. Modal’s annualized revenue run rate (ARR) is estimated to be around $50 million. However, it is important to note that the discussions are still in the early stages, and the terms of the deal could change.
Modal Labs, founded by CEO Erik Bernhardsson in 2021, is focused on optimizing inference, which involves running trained AI models to generate responses to user queries. By improving inference efficiency, the company aims to reduce compute costs and minimize the latency between a user’s input and the AI’s output.
Intense Investor Interest in Inference-Focused Companies
Modal is not the only company in the AI inference space attracting significant investor attention. Competitors like Baseten, Fireworks AI, Inferact, and RadixArk have also recently announced substantial funding rounds at impressive valuations.
For instance, Baseten secured a $300 million raise at a $5 billion valuation, while Fireworks AI received $250 million at a $4 billion valuation. Inferact, the creators of the vLLM open source project, raised $150 million in seed funding led by Andreessen Horowitz. Additionally, RadixArk, the team behind SGLang, secured seed funding at a $400 million valuation led by Accel.
Modal’s co-founder and CEO, Erik Bernhardsson, brings over 15 years of experience in building and leading data teams at companies like Spotify and Better.com, where he served as the CTO. The startup’s earlier backers include Lux Capital and Redpoint Ventures.
