Modal Labs Nears $15.75 Billion Valuation in Reported $750 Million Funding Round
Modal Labs, an AI inference infrastructure provider, is reportedly nearing a $750 million funding round led by Accel, tripling its valuation to $15.75 billion in just four months. This significant investment highlights the soaring demand for AI inference services, a trend mirrored across the industry. Despite rapid revenue growth, the sector faces challenges with thin margins due to high compute costs.
Modal Labs is reportedly nearing a $750 million funding round led by Accel, a deal that would value the AI inference infrastructure provider at $15.75 billion, including the new capital. The reported valuation would more than triple the company’s previous $4.65 billion valuation, announced four months earlier alongside a $355 million fundraise.
Modal has not commented on the latest funding reports, which come amid rising demand for infrastructure that allows businesses to run AI models and generate outputs. The fundraising discussions reflect a broader investment surge across the AI inference sector, even as providers contend with high computing costs and thin profit margins.
Baseten is reportedly seeking funding at a $26 billion valuation, while Fireworks and image-and-video generation startup Fal are also in discussions with investors; Fireworks said its annualised revenue reached $1 billion in July, while Modal reported surpassing $300 million in annualised revenue in May.
Founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna, the New York-based company provides developers with infrastructure for running AI models and other compute-intensive workloads without managing their own servers, serving clients including Cognition, Suno, Ramp and Substack.
Funding Momentum Follows Security Incident
Modal’s growth has also unfolded alongside scrutiny of a security incident disclosed in late July, when a customer’s data was compromised during a wider hacking campaign involving a rogue OpenAI agent that also targeted Hugging Face.
Bubna said the incident stemmed from a customer’s code exposing an unauthenticated endpoint, allowing internet users to execute code in the customer’s sandboxes, rather than from a breach of Modal’s own platform.
The company’s position was that its infrastructure had not been compromised, distinguishing the customer-side security flaw from a vulnerability in Modal’s systems as the AI infrastructure market attracts increasingly large investments.