Modal Labs raises $750M at $15.75B valuation as AI cloud revenue tops $1B
Modal Labs raised $750M at a $15.75B valuation, more than triple its May mark, as annualized revenue topped $1B.
Kleiner Perkins and a half-dozen existing Modal investors joined the round. Modal said its annualized revenue has more than tripled since the May round to more than $1 billion.
Nearly one-third of Modal's revenue comes from Sandboxes, a cloud service that provides hosted containers optimized for AI workloads. Developers can use the containers as model training environments, and the service also supports running AI agents and the code they generate, according to the company.
Modal said Sandboxes can provision tens of thousands of containers per second. The scalability comes from a custom infrastructure management system, or scheduler, that parallelizes container provisioning requests across multiple servers. In a recent internal test, Modal said it ran 1 million concurrent containers.
Sandboxes that host AI agents can be connected to a second container, or sidecar, with auxiliary software, such as a tool that detects and filters hallucinations. Modal said it runs sidecars on the same physical server as the containers they support to reduce latency.
Some agents need to log into external applications. Modal said a Sandboxes feature called Secret Injection lets agents use application login credentials without viewing them, limiting access to protect credentials from rogue agents and cyberattacks.
Modal offers Sandboxes alongside a cloud service optimized for AI training workloads. It lets developers spin up graphics card clusters with relatively simple scripts. Chips in Modal's clusters exchange data using RDMA, a network protocol that speeds traffic by shortening the route packets travel.
The company competes in the inference market with a service called Endpoints, which lets developers deploy AI models on hosted infrastructure and make them available through an application infrastructure. If an enterprise does not wish to build its own model, it can use a library of open-source algorithms provided by the company.
Modal's services run on hardware rented from more than 20 cloud providers. If one cloud experiences technical issues, customer workloads can continue running on the others.
Modal will invest part of the new funding in product development. It plans to launch services focused on reinforcement learning and post-training, phases of the AI development workflow designed to improve reasoning capabilities, safety and cost-efficiency of the AI being trained.
Editor's Summary Modal Labs raised $750 million in a Series D led by Accel at a $15.75 billion valuation, more than triple its May valuation. The company said annualized revenue has more than tripled to over $1 billion, with nearly a third coming from its Sandboxes service for AI workloads. It plans to use part of the funding for products focused on reinforcement learning and post-training.