Modal raises $750 million at $15.75 billion valuation

Modal, an AI inference platform, reached $1 billion in annual recurring revenue and raised a $750 million Series D led by Excel at a $15.75 billion valuation. CEO Eric Bischoff stated the company is profitable on a product-line basis but has negative cash flow due to heavy capital expenditure on GPUs and capacity. Modal operates as an aggregation layer, working with 25 neoclouds and building its own file system, container runtime, and scheduler to treat global compute as a single pool. The company reports monthly growth rates of 30-40% and projects GPU lead times of 3-4 months. Bischoff noted that Modal’s sandbox product, launched in 2023, now generates $300 million in run-rate revenue, accounting for one-third of total revenue, driven by the rise of code-generating models. The company aims for 40-60% gross margins long-term, arguing that the AI stack’s multiple layers prevent the 90% margins seen in traditional software. Bischoff described the inference market as 10x to 100x larger than expected, leading to fragmentation into specialized products like low-latency and batch inference. He believes the market is too large to be overbuilt in the next five years and sees an opportunity to create a $100 billion company with a lot of specialized models in the inference.