Modal raises $750 million in round that values it at $15.75 billion
Key Facts
Modal announced on October 14 that it had completed a $750 million Series D funding round at a post-money valuation of $15.75 billion, according to a company statement. Accel led the round, joined by Kleiner Perkins, while existing investors also participated, including Menlo Ventures, General Catalyst, Redpoint, Lux Capital, Amplify Partners and Bain Capital Ventures. The round places the company among a wave of funding directed toward infrastructure powering artificial intelligence applications. Modal said the funding would support continued development of new products and infrastructure, without specifying a detailed spending plan. The news published via PR Newswire was a separate New York Stock Exchange update dated October 27, not an announcement of the round.
The funding coincided with rapid operating expansion, based on figures announced by the company. Modal said it had exceeded $1 billion in annualized revenue run rate, calculated at its current pace. It added that usage had tripled since it announced its Series C round five months earlier, and that growth had exceeded 15 times year over year through the October announcement. The company wrote: "Just five months ago, when we announced our Series C, I said demand was accelerating. Since then, usage has tripled and we have grown more than 15 times year over year." That puts the increase in revenue and usage at the heart of the company's account of business growth between the two rounds.
Modal raised $355 million in a Series C round in May at a post-money valuation of $4.65 billion, and said at the time that its annualized revenue run rate had exceeded $300 million. The company said its annualized revenue run rate had grown fivefold from the previous September through the May announcement. According to Reuters, the run rate rose from $60 million in September to about $300 million in May. The news agency also reported that Modal was working with 13 cloud providers at the time, compared with five the previous year. These figures provide context for the change between the valuation announced in May and the new valuation in October, without by themselves detailing the terms of the round.
Part of the company's activity is tied to its Sandboxes product, which lets developers test code before integrating it into products, according to Reuters. Modal said it launched the product in 2023 after noticing artificial intelligence models being used to generate code. It added that the product had reached an annualized revenue run rate of $300 million at the time of the October announcement. The company described the product as having "exploded" in usage, and said it reached that level three years after launch. It also said its platform aggregates capacity across more than 20 clouds, and that it had run nearly 3 billion sandbox environments through the October announcement.
Modal's user base includes companies across different industries, according to examples cited by the company. It said DoorDash's artificial intelligence team uses its platform to move applications from experimentation to production, while Cognition, Ramp, Linear and Hebbia are building agents that run in the background. The company also listed Runway, Physical Intelligence, Generalist AI, 1X, Chai Discovery and Achira among examples of companies using its services. Modal said its team includes more than 200 employees spread across New York, San Francisco and Stockholm. The statement does not break down revenue by product or each customer's contribution to the annualized revenue run rate.
Modal is expanding its services from running applications into training and post-training tools. It said it had launched multi-node training, with compute clusters connected via RDMA and no advance commitment to capacity, and was also working on products for reinforcement learning and post-training processing. The company said virtual machines had become generally available within Sandboxes. In October, it announced that it would run Nvidia Vera processors alongside Intel and AMD chips, and said early tests showed Nvidia processors doubled the work completed by artificial intelligence agents. Chief Executive Eric Bernhardsson told Reuters the company would test newer generations of Intel and AMD processors when they became available, adding: "We can always deploy the hardware that delivers the best performance."