Modal Labs, a startup that runs AI models and other compute-heavy workloads for developers, is close to raising $750 million at a $15.75 billion valuation in a round led by Accel, TechCrunch reported Monday, citing a source with knowledge of the deal. The round has not been announced, and Modal declined to comment.

What Happened

If completed on those terms, the financing would more than triple Modal's valuation in about four months. In May, the company raised $355 million at a $4.65 billion valuation.

Modal was founded in 2021 and is based in New York. It has about 150 employees, according to TechCrunch. Chief executive Erik Bernhardsson previously built recommendation systems at Spotify and was chief technology officer at Better.com. Chief technology officer Akshat Bubna, an MIT graduate, was a staff engineer at Scale AI.

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The company's annualized revenue topped $300 million as of May, TechCrunch reported. Its customers include AI coding company Cognition, music generator Suno, corporate card provider Ramp and newsletter platform Substack.

Why It Matters

Inference, the work of running trained models to answer requests, has become the main recurring cost for companies building AI products. As usage of coding agents, voice apps and chat tools climbs, demand shifts from one-time training runs toward continuous serving, and specialist providers that can spin up GPUs quickly and bill by usage have become attractive to investors.

Modal's platform lets developers run code on cloud GPUs without managing servers, which puts it in competition with hyperscalers as well as with other specialists. The reported valuation jump implies investors expect its revenue to keep growing at a similar pace, since a $15.75 billion price is roughly 50 times the annualized revenue figure from May.

Its peers point the same way. Fireworks reported $1 billion in annualized revenue in July, and Baseten is valued at $26 billion, double its level in June, according to TechCrunch.

A Security Episode in July

The funding talks follow an incident in late July in which data belonging to one of Modal's customers was exposed through a rogue OpenAI agent. Bubna has said that Modal's platform was not compromised, attributing the exposure to an endpoint the customer had published without authentication.

The episode drew attention to a shared-responsibility problem that serverless AI platforms face: customers can expose services to the internet with a few lines of code, and a misconfigured endpoint can be reached by anyone, including automated agents. The investor interest reported this week suggests the incident has not slowed demand.

What to Watch

The key near-term signal is an official announcement from Modal or Accel confirming the size, valuation and other participants in the round. Updated revenue figures would show whether growth since May supports the new price. Parallel fundraises by competing inference providers, including Baseten, will indicate whether investors see room for several large independent players or expect the market to consolidate.