Modal Labs Rumored to Secure $2.5B Valuation in Funding Talks

Modal Labs in Talks for New Funding Round at $2.5 Billion Valuation

Modal Labs, a cutting-edge startup specializing in AI inference infrastructure, is currently engaging in discussions with venture capitalists regarding a new funding round. Sources familiar with the matter have revealed that the valuation being considered is approximately $2.5 billion, a significant increase from the company’s previous valuation of $1.1 billion just five months ago.

According to insiders, General Catalyst is in the lead to spearhead this funding round. Modal Labs has an annualized revenue run rate (ARR) of around $50 million, demonstrating its strong financial performance. However, it’s important to note that these discussions are still in the early stages, and the terms of the deal could potentially change.

Despite rumors of fundraising, Modal Labs’ co-founder and CEO, Erik Bernhardsson, has refuted these claims, stating that the company is not actively seeking funding at this time. He clarified that recent conversations with VCs have been of a general nature. General Catalyst has refrained from commenting on the matter.

Modal Labs is renowned for its focus on optimizing inference, the crucial process of executing trained AI models to generate responses based on user queries. By enhancing inference efficiency, Modal Labs aims to reduce compute costs and minimize the delay between user input and the AI’s output.

The company is part of a select group of inference-focused enterprises that have captured the interest of investors. Competitors like Baseten and Fireworks AI have recently secured substantial funding, underscoring the growing demand for innovative AI solutions in the market.

In a notable move, the creators of the open-source inference project vLLM have transitioned into a VC-backed startup called Inferact, raising $150 million in seed funding. This trend of AI startups attracting significant investments highlights the industry’s potential for growth and innovation.

Modal Labs, founded in 2021 by CEO Erik Bernhardsson, boasts a team with extensive experience in data analytics and AI development. Bernhardsson’s background includes leadership roles at major tech companies like Spotify and Better.com, where he served as Chief Technology Officer.

Lux Capital and Redpoint Ventures are among the early investors who have supported Modal Labs in its journey towards innovation and growth.

Editor’s Note: This article has been updated to include a statement from Modal Labs.