Modal Labs Negotiates $2.5B Valuation as AI Inference Market Heats Up

11.02.2026

Modal Labs, a startup specializing in AI inference infrastructure, is currently negotiating a new funding round at an estimated valuation of approximately $2.5 billion, according to four sources familiar with the matter. If the deal closes at these terms, it would represent more than a doubling of the company's $1.1 billion valuation announced less than five months ago.

General Catalyst is reportedly in discussions to lead the investment round. Sources indicate that Modal's annualized revenue run rate (ARR) stands at approximately $50 million. However, the negotiations are still in early stages, and terms remain subject to change. Both Modal Labs and General Catalyst declined to comment on the matter.

Modal focuses on optimizing inference — the process of executing trained AI models to generate responses from user queries. Enhanced inference efficiency translates to reduced computational costs and minimized latency between user prompts and AI-generated outputs.

Surging Investor Interest in Inference Infrastructure

Modal is among a select group of inference-focused companies attracting significant venture capital attention. Recent comparable funding rounds include:

• Baseten: Secured $300 million at a $5 billion valuation last week, more than doubling its $2.1 billion valuation from September
• Fireworks AI: Raised $250 million at a $4 billion valuation in October
• Inferact: The commercialized version of open source project vLLM raised $150 million in seed funding led by Andreessen Horowitz at an $800 million valuation in January
• RadixArk: The team behind SGLang commercialized as RadixArk, reportedly securing seed funding at a $400 million valuation led by Accel

Company Background

Modal was co-founded by CEO Erik Bernhardsson in 2021. Bernhardsson brings over 15 years of experience building and leading data teams at companies including Spotify and Better.com, where he served as CTO. The startup's earlier backers include Lux Capital and Redpoint Ventures.

Sources:
Modal Labs Official Website
Modal Labs Series B Announcement
Baseten Series E Announcement