- Bloomberg reports that Modal Labs is aiming to raise money at a $15 billion valuation.
- The new valuation would raise Modal’s value from $4.65 billion four months ago to almost three times that amount.
- Baseten, a competitor, is also negotiating a deal to raise its valuation to $26 billion.
Erik Bernhardsson spent 15 years working on recommendation systems at Spotify and was in charge of engineering at Better.com before concluding that cloud computing could be improved. At present, investors appear willing to back his idea with $15 billion.
Modal Labs, the AI infrastructure startup that Bernhardsson founded in January 2021, is currently seeking new capital at this valuation, Bloomberg reported, citing sources familiar with the negotiations.
Earlier this year, in May, the company raised $355 million at a $4.65 billion valuation, up from $1.1 billion the previous autumn. A new round closing at $15 billion would nearly triple the valuation in just four months.
At the moment, inference is the area receiving the most attention, inference being the process by which a trained AI model responds to prompts. It is now receiving more attention than it did during the earlier training phase. Analysts state that inference now accounts for around two-thirds of AI computing demand, compared with one-third in 2023.
A forecast indicates that the AI inference market will reach $103.7 billion this year and rise to $312.6 billion by 2034. Since companies developing AI products require inexpensive infrastructure, investors are eager to support those who can provide it efficiently.
Modal Labs’ core offerings
Modal is headquartered in New York and has engineering teams in both San Francisco and Stockholm, and had over 120 employees when it last raised funds.
Bernhardsson founded the company together with Akshat Bubna, who had previously worked at Scale AI and left his position as CTO at Better.com. Rather than using AWS or Azure, they developed their own file system, container runtime, and scheduler so that customers can access GPUs in less than a second.
Customers are charged for both GPU and CPU time per second. An increasing number of people are using Modal’s Sandboxes product, which allows AI coding agents to write, run, and test code in separate environments before going live.
Baseten is among Modal’s competitors and is currently in discussions about a funding round that could raise its valuation from $ 13 billion to $ 26 billion in June. Other competitors include Together AI, which raised $800 million in July at an $8.3 billion valuation, and Fireworks AI, which has a $4 billion valuation.
What sets Modal apart is its focus on developer experience and its particular expertise in coding sandboxes.
Financial performance and funding details
By April, annualised revenue at Modal had reached $300 million, up from about $119 million at the end of 2025. The majority of this growth was due to its AI coding tools, which produce code that needs to be run.
The most recent funding round was led by General Catalyst and Redpoint Ventures, with Accel, Menlo Ventures and Bain Capital Ventures also taking part. This has taken Modal’s total funding since 2021 to around $465 million.
Revenue has increased fivefold in six months, with the valuation possibly tripling over the next four months. However, the two figures are not rising at the same rate, and GPU supply remains limited, so margins could be squeezed when supply finally meets demand.
