Modal Labs, a pioneering startup in AI inference infrastructure, is reportedly in discussions with venture capital firms regarding a fresh funding round, aiming for a valuation around $2.5 billion. This information comes from four individuals familiar with the ongoing negotiations. If successful, this new funding round would significantly bolster Modal's valuation, which stood at $1.1 billion just a few months ago following an $87 million Series B funding. Sources indicate that General Catalyst is poised to lead this round.
Modal Labs is experiencing a strong revenue trajectory, with an annualized revenue run rate close to $50 million, according to insiders. However, the talks are still in preliminary stages, and the terms are subject to change. Erik Bernhardsson, Modal Labs' co-founder and CEO, has denied that the company is actively seeking funds, describing his engagements with venture capitalists as routine discussions. General Catalyst has yet to respond to queries for comments.
The startup's focus is on refining AI inference, which involves executing trained AI models to respond efficiently to user queries. By enhancing inference, Modal Labs aims to lower computational costs and minimize response delays for users. The company is part of a niche group of inference-specialized startups garnering significant investor interest. Recently, competitor Baseten secured $300 million, reaching a $5 billion valuation, and Fireworks AI attracted $250 million at a $4 billion valuation. In a similar vein, the team behind vLLM, an open-source inference initiative, has formed a startup named Inferact, raising $150 million at an $800 million valuation led by Andreessen Horowitz. Additionally, the creators of SGLang have launched RadixArk, which reportedly raised seed funding at a $400 million valuation led by Accel.
Founded in 2021 by Erik Bernhardsson, who previously held senior roles at companies like Spotify and Better.com, Modal Labs has quickly attracted attention in the tech world. Its early investors include Lux Capital and Redpoint Ventures.