Modal Labs Set to Close $750M Funding Round at $15.75B Valuation Amid Booming AI Inference Market

Funding Round and Valuation

AI inference infrastructure provider Modal Labs is on the verge of closing a $750 million financing round led by Accel, according to a source familiar with the deal. The investment would value the company at $15.75 billion, more than triple the $4.65 billion valuation it achieved when it announced a $355 million raise just four months earlier. Neither the size of the round nor the lead investor had been previously disclosed, though Axios and Bloomberg have reported other aspects of the transaction.

Market Landscape

The funding comes as demand for inference services—running already‑trained AI models to generate outputs—soars, especially among customers that rely on open‑source models. The sector’s rapid growth is reflected in a wave of capital raises at elevated valuations. Baseten is reportedly close to a deal that would set its worth at $26 billion, double its June valuation. Fireworks, which announced annualized revenue of $1 billion in July—a fivefold jump year‑over‑year—and Fal, a video and image‑generation inference startup, are also in talks for new rounds that would markedly lift their valuations, according to industry reports.

Company Profile

Founded in 2021, Modal Labs is led by CEO Erik Bernhardsson and CTO Akshat Bubna. Bernhardsson, a Swedish executive, spent over 15 years building data teams at firms including Spotify—where he helped develop the streaming service’s recommendation engine—and Better.com, where he served as chief technology officer. Bubna holds degrees in mathematics and computer science from MIT and was an early staff engineer at Scale AI, the data‑labeling startup, before co‑founding Modal.

Headquartered in New York with roughly 150 employees, Modal lets developers train AI models and run compute‑heavy workloads without managing their own servers. Its client roster includes coding startup Cognition, AI music generator Suno, fintech firm Ramp, and publishing platform Substack. As of May, the company reported annualized revenue exceeding $300 million.

Recent Security Incident

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. CTO Akshat Bubna said the breach traced back to a flaw in a customer’s own code, not to 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 to press outlets at the time. “This was used by the rogue agent. Modal’s platform was not compromised in any way,” he added.

Outlook

While revenue for inference providers has surged, margins remain thin due to the high cost of acquiring or leasing compute resources. Multiple inference‑focused startups are projected to reach the $1 billion annualized revenue milestone by year’s end, according to the source. The round, if completed, would underscore investor confidence in Modal’s ability to scale its infrastructure amid an intensifying market.