Amid the explosive demand for AI inference infrastructure, startup Modal Labs is at the center of the storm. According to four sources, Modal Labs is currently in discussions with venture capital firms, including General Catalyst, for a new round of funding, with a target valuation of approximately $2.5 billion.

If the deal is finalized, Modal's valuation will more than double within less than five months (it was valued at $1.1 billion during its B-round financing last September).

Core Business: Focusing on "Inference Economics"

Modal's core strength lies in optimizing the **inference** process of AI models. By improving the efficiency of model-generated answers, Modal helps companies reduce costly computing expenses and significantly shorten the latency between user requests and AI responses.

  • Revenue Scale: Sources say Modal's annual recurring revenue (ARR) is currently around $50 million.

  • Official Response: CEO Erik Bernhardsson denies that the company is "actively" raising funds, but acknowledges frequent communications with venture capital firms recently.

Modal's valuation surge is not an isolated case; the entire "AI inference" sector is experiencing an unprecedented capital race. Below are key investment and financing developments in the field recently:

Entering 2026, market logic has shifted from the "large model competition" to "application implementation." As model training becomes more mature, companies have realized that the cost of **running** models (i.e., inference costs) is the core of long-term expenditures. Modal and similar companies have become the "new utilities" of the AI era by building efficient compute pools and API interfaces.