Modal Labs Raises $750 Million at a $15.75 Billion Valuation

Modal Labs, the New York company that runs cloud infrastructure for AI applications, has raised a $750 million Series D at a $15.75 billion post-money valuation. Co-founder and CEO Erik Bernhardsson announced the round on October 14 in a post on the company's blog.

Accel led the financing, and Kleiner Perkins joined. Bernhardsson wrote that all of Modal's existing investors also took part, including Menlo Ventures, General Catalyst, Redpoint, Lux Capital, Amplify Partners and Bain Capital Ventures. Crunchbase News ranked it as the largest U.S. startup round of the week of October 10 to 16.

The Numbers Behind the Round

The headline figure is growth. In his announcement, Bernhardsson wrote that usage has tripled in the five months since Modal's Series C, that the company has grown more than 15 times year over year, and that it recently crossed $1 billion in annualized run rate.

The valuation has moved just as quickly. The Next Web reported that Modal raised $355 million at a $4.65 billion valuation in May, which means the new price is more than three times what investors paid only five months ago.

Modal now has more than 200 employees across New York, San Francisco and Stockholm, according to the company.

What Modal Actually Sells

Modal gives developers the computing power they need to run AI models and code without managing the servers themselves. Its customers write code, and Modal runs it on graphics processors drawn from a capacity pool that the company says now spans more than 20 clouds.

Bernhardsson described the problem in plain terms: "GPUs are scarce, and models are quite large and slow to load." Rather than build on top of existing tools, Modal says it built its own file system, container runtime, scheduler and networking from the ground up.

The company named a long list of customers in its announcement, including DoorDash, Ramp, Linear, Cognition and the video AI company Runway. It also said robotics companies such as Physical Intelligence and 1X train robots on the platform.

The Product That Came From Watching Customers

The most useful part of the story for founders may be Sandboxes. Bernhardsson wrote that Modal launched the product in 2023 after noticing that people were using large language models to generate code, and that code needed a safe, isolated place to run.

Three years later, Sandboxes is a $300 million run rate product on its own, according to the company. Modal says it has spun up close to 3 billion sandboxes, and that they can scale to a million running at the same time.

That is a pattern worth studying. Modal did not invent a new market from a whiteboard; it watched how customers were already using its first product, functions that run code on demand, and built the next product around a behavior it could see in the data.

What Founders Can Take From It

Build building blocks, not one-off features. Bernhardsson's argument is that general purpose, well tested pieces let customers combine them in ways the founders never planned. When he started Modal five years ago, he wrote, he could not have imagined most of the applications now running on it.

Ride a platform shift with infrastructure that fits it. Bernhardsson wrote that he has been writing software since the early nineties and has lived through the web, the cloud, big data and mobile. Each shift, he argued, created demand for new tools, and Modal is betting that AI is the next one.

Raise when the numbers are moving. A second large round only five months after the first is unusual. Modal went back to investors with tripled usage and a billion dollar run rate, which gave it a strong position to set terms.

Keep the team lean relative to revenue. A company passing $1 billion in run rate with a team of a little over 200 people shows how much leverage strong infrastructure products can create.

What Comes Next

Modal says it is moving up the stack. The company recently launched multi-node training, is adding products for reinforcement learning and post-training, has introduced Modal servers for HTTP workloads, and has made virtual machines generally available inside Sandboxes.

Bernhardsson closed his note by saying it is hard to imagine the software people will be building two years from now, but that it will need a new set of building blocks. With $750 million in fresh capital, Modal is betting it can supply many of them.

For founders building in AI, the takeaway is simple: watch what your users are already doing, and build the tool they keep improvising. Follow Founder 100 Magazine for more coverage of the startups and founders shaping the year.