Modal Labs raises $355M, quadrupling valuation to $4.65B as AI infrastructure demand surges

AI startups are running into two problems at once: too much AI-generated code and not enough computing power to run it. Modal Labs is betting it can solve both.

The New York-based AI infrastructure startup has raised $355 million in new funding at a $4.65 billion valuation, a massive jump from the roughly $1.1 billion valuation it secured less than a year ago. The latest Series C round was led by Redpoint Ventures and General Catalyst, with participation from Accel and Menlo Ventures, according to an exclusive report from Reuters.

The sharp rise in Modal’s valuation reflects the breakneck pace of AI adoption across the software industry. As developers lean harder on AI coding tools to generate applications, demand for the infrastructure needed to run those systems has surged right alongside it.

Modal helps companies access the GPUs required to run AI inference workloads, the process of serving and executing AI models after training. The company sells serverless infrastructure that lets developers deploy AI applications without dealing with the headache of managing cloud servers directly. Modal’s platform includes a sandbox environment where developers can test AI-generated code before shipping it into production systems.

AI startup Modal hits $4.65B valuation after raising $355M in funding amid AI infrastructure boom

The funding comes less than a year after TechStartups covered Modal’s $87 million Series B round led by Lux Capital in October 2025. At the time, the company had raised roughly $110 million in total funding.

Founded by Erik Bernhardsson and Akshat Bubna, Modal has seen revenue spike over the past six months as AI coding tools reshape software development workflows.

“The last six months have been driving everything,” Bernhardsson told Reuters, pointing to the explosion in AI-assisted coding. He said Modal’s customers include biotech firms, hedge funds, and weather forecasting companies.

That growth has translated into serious revenue momentum. Modal’s annualized revenue climbed to roughly $300 million, up from about $60 million in September, according to the company.

At the same time, finding sufficient compute capacity has become an increasing challenge across the AI industry. GPU shortages and rising infrastructure costs have pushed startups to search far beyond traditional cloud vendors for available capacity.

Bernhardsson said Modal now works with 13 cloud providers, up from five last year, after expanding its search for compute partners. Some of those providers were companies he had never heard of before.

The company raised the new funding in two separate tranches. The first group of investors backed Modal at a $2.5 billion valuation. Interest from additional investors later pushed the valuation up to $4.65 billion in the second tranche.

The deal adds Modal to the growing list of AI infrastructure startups pulling in huge valuations as investors race to back the companies supplying the tools, chips, and cloud systems behind the AI boom.

Modal Labs Team