AI Inference Startup Modal Labs Nears $2.5B Valuation in New Funding Round

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Modal Labs, a startup focused on optimizing AI inference, is in discussions to raise a new funding round at a valuation of around $2.5 billion, more than doubling its previous $1.1 billion valuation from less than five months ago. General Catalyst is in talks to lead the round, and Modal's annualized revenue run rate is approximately $50 million, according to sources.

Why it matters

The potential $2.5 billion valuation for Modal Labs highlights the intense investor interest in AI inference infrastructure companies, as businesses look to improve the efficiency and speed of running AI models. Modal's competitors like Baseten and Fireworks AI have also recently raised large funding rounds at multi-billion dollar valuations, underscoring the high demand for technologies that can reduce compute costs and latency in AI applications.

The details

Modal Labs was co-founded in 2021 by CEO Erik Bernhardsson, who previously held data leadership roles at companies like Spotify and Better.com. The startup is focused on optimizing the inference process, which is the running of trained AI models to generate responses to user requests. Improving inference efficiency can lower compute costs and decrease the lag time between a user's prompt and the AI's response.

• Modal Labs was founded in 2021.
• The company announced a $1.1 billion valuation less than five months ago.
• The current funding round discussions are still in early stages.

What’s next

The discussions around Modal Labs' new funding round are still in early stages, and the terms could still change before the deal is finalized.