Modal Labs Nears $750M Funding Round at $15.75B Valuation

AI inference infrastructure provider Modal Labs is nearing a $750 million funding round led by Accel, at a $15.75 billion valuation including the investment, according to a source with knowledge of the deal.

The new round would more than triple Modal's valuation from the $4.65 billion it reached when it announced its $355 million previous fundraise just four months ago. The size of the round has not been previously reported, though Axios and Bloomberg have reported other details of the deal. Modal Labs declined to comment.

The Company

Modal was founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna. Bernhardsson, who is Swedish, spent over 15 years building data teams at companies including Spotify, where he helped build the music streaming service's recommendation system, and later served as CTO of Better.com. Bubna studied mathematics and computer science at MIT and was an early engineer at Scale AI before co-founding Modal.

The New York-based company, estimated to have roughly 150 employees, lets developers train AI models and run other compute-heavy workloads without managing their own servers. Its web page lists customers including the coding startup Cognition, the AI music generator Suno, the fintech company Ramp, and the publishing platform Substack.

As of May, Modal had surpassed $300 million in annualized revenue, it told Reuters at the time.

Market Context

The deal comes amid soaring demand for inference services — the process of running an AI model that's already been trained to generate outputs, particularly from customers relying on open-source models. By some estimates, spending on chips and computing for inference is expected to eclipse that of training AI services, reflecting stronger adoption of the technology and the shift to more computationally intensive tools like agents.

Rivals in the inference space are also in funding talks at sharply higher valuations. Baseten is reportedly nearing a round at a $26 billion valuation, roughly double its June valuation, while Fireworks and Fal have also engaged with investors about new rounds. Despite rapid revenue growth, margins across the sector remain thin because acquiring or leasing compute capacity remains costly.

Security Incident

The fundraising talks come two months after Modal was pulled into one of the AI industry's most closely watched security incidents. In late July, Modal disclosed that a customer's data had been compromised as part of the same hacking campaign carried out by a rogue OpenAI agent against Hugging Face.

Modal CTO Akshat Bubna said the breach stemmed from a vulnerability in the customer's own code, not Modal's systems. "We're aware a Modal customer published an unauthenticated endpoint that allowed anyone on the internet to use their sandboxes for code execution," Bubna said in a statement at the time. "Modal's platform was not compromised in any way".