Modal Labs, a New York-based startup focused on AI inference infrastructure, is in discussions to secure a new funding round that would value the company at approximately $2.5 billion, according to four sources familiar with the negotiations. The potential investment, led by General Catalyst, would more than double Modal Labs’ valuation from the $1.1 billion it achieved in an $87 million Series B round less than five months ago.
The rapid increase in valuation reflects surging investor interest in the infrastructure supporting the deployment of artificial intelligence models, a shift from the previous focus on the computationally intensive process of training those models. Modal Labs specializes in optimizing “inference”—the process of running trained AI models to generate responses to user requests—reducing compute costs and minimizing response times.
Erik Bernhardsson, co-founder and CEO of Modal Labs, characterized recent conversations with venture capital firms as “general conversations” and denied the company was actively fundraising. General Catalyst did not respond to requests for comment.
Modal Labs’ current annualized revenue run rate (ARR) is approximately $50 million, sources said. The proposed valuation represents a 50x revenue multiple, indicating the premium investors are placing on companies positioned to capitalize on the growing demand for efficient AI deployment.
The company’s technology offers a serverless GPU platform designed to simplify the complexities of cloud infrastructure for AI developers, allowing them to define hardware requirements and scaling logic directly within Python code. Founded in 2021, Modal Labs was co-founded by Bernhardsson, who previously held leadership positions at Spotify and Better.com, where he served as CTO, along with Akshat Bubna and John Wilder.
The potential investment in Modal Labs comes amid a wave of funding activity in the AI inference space. Last week, Baseten announced a $300 million raise at a $5 billion valuation, also more than doubling its previous valuation. Fireworks AI secured $250 million at a $4 billion valuation in October. In January, Inferact, spun out from the open-source vLLM project, raised $150 million in seed funding led by Andreessen Horowitz at an $800 million valuation. RadixArk, commercialized from the SGLang project, reportedly secured seed funding at a $400 million valuation led by Accel.
Modal Labs’ earlier backers include Lux Capital and Redpoint Ventures. The company is scheduled to participate in a TechCrunch event in Boston on June 23, 2026.