Source: Inference provider Modal Labs closing in on $750M 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 that includes the investment, according to a source with knowledge of the funding. The size of the round has not been previously reported, though Axios and Bloomberg have reported other details 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.

Modal Labs declined to comment.

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. Other inference startups are also in talks to raise fresh capital at much higher valuations. Baseten is nearing an infusion of capital at a $26 billion valuation, doubling what it was worth in June, Bloomberg reported. Meanwhile, Fireworks and Fal, a startup providing inference for video and image generation, have also talked to investors about new rounds that would significantly increase their valuations, according to The Information.

Although revenue for these companies has been growing rapidly, their margins are thin, largely because the cost of acquiring or leasing compute remains very high. Fireworks announced in July that its annualized revenue had hit $1 billion, a fivefold increase from the year before. Multiple inference-focused startups are expected to reach the same revenue milestone by year’s end, according to our source.