Modal Labs Nears $750 Million Accel Round at $15.75 Billion Valuation
Modal Labs nears a $750 million Accel-led round at a $15.75 billion valuation as AI inference demand surges despite thin margins and major security risks.
Summary
On September 28, 2026, Modal Labs was nearing a $750 million Accel-led round at a $15.75 billion post-money valuation. The deal would more than triple Modal’s $4.65 billion valuation from its $355 million raise four months earlier. Modal declined to comment.
Demand is surging for inference, particularly among users of open-source models, but expensive purchased or leased compute keeps margins thin. Baseten is nearing funding at a $26 billion valuation, twice its June level, while Fireworks and Fal, which serves video and image generation, have discussed sharply higher-priced rounds. Fireworks reached $1 billion in annualized revenue in July, five times its year-earlier level, and multiple inference startups could reach that milestone by year-end.
Founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna, New York-based Modal has about 150 employees and lets developers train models and run compute-heavy workloads without managing servers. Customers include Cognition, Suno, Ramp and Substack, while annualized revenue surpassed $300 million by May. In late July, customer data was compromised during a campaign involving a rogue OpenAI agent and Hugging Face. Bubna said an internet-accessible, unauthenticated endpoint in customer code enabled sandbox execution, while Modal’s platform was not compromised.
Positives
- $750 million in prospective funding would give Modal Labs substantial capital to expand its inference infrastructure.
- $300 million in annualized revenue by May demonstrates rapid commercial adoption of Modal’s platform.
- $1 billion in Fireworks annualized revenue during July marked fivefold year-over-year growth.
- Cognition, Suno, Ramp and Substack are listed among Modal’s customers.
- $26 billion is Baseten’s prospective valuation, twice its June level, reflecting strong investor demand for inference providers.
Risks & concerns
- High purchased or leased compute costs are keeping inference providers’ margins thin despite rapid revenue growth.
- Late July’s hacking campaign compromised a Modal customer’s data through an unauthenticated endpoint in the customer’s code.
- Modal’s prospective $15.75 billion valuation would more than triple its $4.65 billion mark in four months, raising valuation risk.
- Fireworks and Fal have only discussed new rounds, leaving their prospective valuation increases uncertain.
- Modal declined to comment on the proposed $750 million financing, so final terms remain unconfirmed.