Modal Labs, the AI inference startup known for optimizing how AI models generate responses, is reportedly in early discussions with venture capitalists for a new funding round at a valuation of around $2.5 billion. If finalized, this would more than double the company’s $1.1 billion valuation announced less than five months ago following its $87 million Series B raise.
Sources familiar with the deal say General Catalyst is in talks to lead the round, with Modal’s annualized revenue run rate (ARR) around $50 million. However, terms are still preliminary, and the fundraising could change. CEO Erik Bernhardsson emphasized that Modal is not actively fundraising, describing his recent VC interactions as exploratory conversations rather than formal negotiations.
Founded in 2021 by Bernhardsson, who spent over 15 years leading data teams at Spotify and Better.com, Modal Labs focuses on AI inference—the process of running trained models to provide rapid responses to user queries. The company aims to make inference faster and more cost-efficient, which could significantly reduce computing expenses and improve AI user experiences.
Modal is part of a growing wave of startups attracting investor attention in the AI inference space. Competitors like Baseten and Fireworks AI have recently secured funding at multi-billion-dollar valuations, while new entrants such as Inferact and RadixArk are also drawing significant venture capital interest. These moves underscore the intense investor appetite for companies that can speed up and scale AI model deployment.
Backed early by Lux Capital and Redpoint Ventures, Modal Labs is now poised to potentially secure a transformative funding round that could accelerate its growth and cement its position in the AI infrastructure landscape. While details are still emerging, the company remains a closely watched player in a sector that is reshaping how AI powers applications across industries.
source: techcrunch