AI startup Modal Labs is in talks to raise its valuation to $2.5 billion, sources say

Conditional laboratoriesa startup specializing in artificial intelligence inference infrastructure, is raising a new round worth about $2.5 billion, according to four people familiar with the deal. If the deal closes on these terms, the financing round will further double the company’s valuation $1.1 billion Announced less than five months ago.

General Catalyst is in talks to lead the round, the people told TechCrunch. Modal’s annual revenue run rate (ARR) is around $50 million, our sources said. Discussions are still early, and terms could still change.

Modal and General Catalyst did not respond to our requests for comment.

The model focuses on improving heuristics, which is the process of running trained AI models to generate answers from user requests. Improving the efficiency of inference reduces computing costs and reduces the delay time between a user prompt and the AI ​​response.

Modal is one of the few heuristics-focused companies attracting intense interest from investors right now. Last week, its competitor Baseten announced a An increase of $300 million With a valuation of $5 billion, more than double the $2.1 billion valuation it reached just months ago in September. Likewise, Fireworks AI, a provider of inference cloud services, earned $250 million at a $4 billion valuation in October.

In January, the creators of the open source inference project vLLM announced that they had turned the tool into a venture capital-backed startup, Inferact, raising $150 million in seed funding led by Andreessen Horowitz at a conference Valuation: $800 million. Meanwhile, TechCrunch reported that the team behind SGLang is commercializing it as RadixArk, which sources tell us has secured seed funding in 400 million dollars Accel-led evaluation.

Modal was co-founded by CEO Erik Bernhardsson in 2021 after spending more than 15 years building and leading data teams at companies including Spotify and Better.com, where he served as CTO.

The startup counts Lux Capital and Redpoint Ventures among its previous backers.