Modal laboratoriesa startup specializing in AI inference infrastructure, is talking to venture capital firms about a new funding round with a valuation of about $2.5 billion, according to four people with knowledge of the deal. If the deal were closed on these terms, the funding round would more than double the company’s valuation. $1.1 billion announced less than five months ago.
General Catalyst is in talks to lead the round, the sources told TechCrunch. Modal’s annualized revenue rate (ARR) is around $50 million, our sources said. Discussions are in their early stages and terms could still change.
Modal Labs co-founder and CEO Erik Bernhardsson denied that his company was actively fundraising and characterized his recent interactions with venture capital firms as general chatter. General Catalyst did not respond to our requests for comment.
Modal focuses on inference optimization, the process of running trained AI models to generate answers from user requests. Improving inference efficiency reduces computational costs and reduces the delay between a user’s prompt and the AI’s response.
Modal is one of the few inference-focused companies currently attracting intense investor attention. Last week, its competitor Baseten announced a $300 million increase at a valuation of $5 billion, more than double the $2.1 billion valuation reached a few months earlier 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 moved the tool to venture-backed startup Inferact, raising $150 million in seed funding led by Andreessen Horowitz at a press conference. Valuation of $800 million. Meanwhile, TechCrunch reported that the team behind SGLang had been trading under the name RadixArk, which sources told us had secured seed funding at an affordable price. 400 million dollars valuation led by Accel.
Modal was co-founded by CEO Erik Bernhardsson in 2021 after spending more than 15 years building and leading data teams at companies including Spotify and Better.com, where he was CTO.
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The startup counts Lux Capital and Redpoint Ventures among its early backers.
Editor’s note: This story has been updated to include a comment from Modal.
Marina Temkin is a venture capital and startups reporter at TechCrunch. Before joining TechCrunch, she wrote about venture capital for PitchBook and Venture Capital Journal. Earlier in her career, Marina was a financial analyst and earned her CFA designation.
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