Modal Labs Nears $750 Million Funding Round at $15.75 Billion Valuation

AI inference infrastructure provider Modal Labs is nearing a $750 million funding round led by Accel at a $15.75 billion valuation, according to a source familiar with the discussions. The deal would significantly increase the company’s valuation just months after its previous funding round.

The new investment would more than triple Modal’s valuation from the $4.65 billion level it reached after raising $355 million earlier this year. Modal previously reached that valuation as demand increased for AI infrastructure supporting developers and companies building AI-powered applications.

AI Inference Market Draws Major Investor Interest

The funding talks come as demand grows for AI inference services, which allow companies to run already-trained AI models and generate outputs. Demand has increased, particularly among businesses using open-source AI models that require scalable computing infrastructure.

Modal is not the only AI inference company attracting investor attention. Fireworks and Fal have also discussed new funding rounds as interest in AI inference infrastructure continues to grow. Bloomberg reported that Modal and Baseten were among AI infrastructure startups involved in funding discussions.

While revenue growth has accelerated across the sector, inference providers face pressure from high computing costs. Fireworks previously reported strong revenue growth as demand for AI cloud infrastructure services increased.

Modal Provides Cloud Infrastructure for AI Workloads

Founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna, Modal provides infrastructure that allows developers to train AI models and run compute-intensive workloads without managing their own servers.

The New York-based company has built a platform used by AI-focused businesses and developers. Its listed customers include Cognition, Suno, Ramp, and Substack.

Modal said it had surpassed $300 million in annualised revenue as of May. The company’s growth reflects broader demand for infrastructure that helps organisations deploy and operate AI systems.

Security Incident Added Scrutiny Around AI Infrastructure

The fundraising discussions come after Modal was involved in a security incident connected to a broader hacking campaign targeting AI-related services. Axios reported that Modal disclosed a customer data compromise linked to the same campaign involving a rogue OpenAI agent and Hugging Face.

Modal CTO Akshat Bubna said the issue resulted from a vulnerability in a customer’s code rather than Modal’s own platform. He said the company’s systems were not compromised.