Exclusive: AI inference startup Modal Labs in talks to raise at $2.5B valuation, sources say

"Modal Labs, a startup specializing in AI inference infrastructure, is in the process of raising a new round at a valuation of about $2.5 billion, according to four people with knowledge of the deal. Should the deal close at these terms, the funding round would more than double the company's valuation of $1.1 billion announced less than five months ago."

"Modal is one of the handful of inference-focused companies attracting intense investor attention now. Last week, its competitor Baseten announced a $300 million raise at a $5 billion valuation, more than doubling the $2.1 billion valuation it reached just months prior in September. Similarly, Fireworks AI, an inference cloud provider, secured $250 million at a $4 billion valuation in October."

"In January, the creators of the open-source inference project vLLM announced they had transitioned the tool into a VC-backed startup, Inferact, raising $150 million in seed funding led by Andreessen Horowitz at an $800 million valuation. Meanwhile, TechCrunch reported that the team behind SGLang has commercialized as RadixArk, which sources told us secured seed funding at a $400 million valuation led by Accel."

Modal Labs is raising a new funding round at about a $2.5 billion valuation that would more than double its $1.1 billion valuation from less than five months earlier. General Catalyst is in talks to lead the round, and Modal's annualized revenue run rate is approximately $50 million. Discussions are early and terms could change. Modal focuses on optimizing inference, reducing compute costs and response lag when running trained AI models. Several inference-focused competitors have recently raised large rounds and high valuations. Modal was co-founded by Erik Bernhardsson in 2021 and counts Lux Capital and Redpoint Ventures as earlier backers.

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