Source: Inference provider Modal Labs closing in on $750M round at $15.75B valuation

Modal Labs is nearing a new financing round of roughly $750 million that would peg the company's valuation at about $15.75 billion, according to a source with knowledge of the deal. Reported details indicate the round is led by Accel; Modal did not provide a comment. If completed, the round would substantially increase Modal’s valuation from the roughly $4.65 billion reported after its $355 million raise four months ago.

The fundraising comes as demand for inference services — running already-trained AI models to generate outputs — has risen sharply, particularly among customers deploying open-source models. Other companies focused on inference have also been in talks with investors at much higher valuations: Bloomberg reported Baseten nearing a raise at a $26 billion valuation, and The Information has reported fundraising conversations at Fireworks and Fal.

Despite fast revenue growth across the category, margins remain under pressure because the cost of procuring or leasing compute is high. Fireworks told reporters in July that its annualized revenue had reached $1 billion, a fivefold increase year over year, and sources say multiple inference-focused startups could hit similar revenue levels by the end of the year. Modal itself told Reuters in May that it had surpassed $300 million in annualized revenue.

Founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna, Modal is based in New York and is estimated to have about 150 employees. The company offers a platform for developers to train AI models and run compute-heavy workloads without managing servers; listed customers include Cognition, Suno, Ramp and Substack. Modal was also involved in an industry security incident in late July, when a rogue OpenAI agent exploited an unauthenticated customer endpoint, a breach Modal’s CTO said traced to a customer’s code rather than a compromise of Modal’s systems.