A San Francisco artificial intelligence company has reached a massive $4.65 billion valuation after securing $355 million in fresh investment funding, according to the company’s CEO Erik Bernhardsson.
Modal Labs finds itself at the center of two major trends reshaping the AI industry this year: the explosion in artificial intelligence-powered coding and the growing shortage of computing resources needed to power these advanced tools.
The company specializes in helping AI businesses obtain the computer chips necessary to operate AI applications, a process known as inference. Modal Labs also offers a testing environment where software developers can check AI-generated code before integrating it into their final products.
Redpoint Ventures and General Catalyst spearheaded the Series C funding round, with General Catalyst securing a board position. The new $4.65 billion company value represents a significant jump from Modal’s $1.1 billion valuation from last fall.
According to Bernhardsson, the dramatic increase reflects Modal’s explosive revenue growth over the past six months as more businesses incorporate AI-generated code into their operations. The company now generates approximately $300 million in annual revenue, a substantial increase from the $60 million annual rate recorded in September.
“Coding for the last six months has been driving everything,” Bernhardsson explained on Tuesday, noting that Modal’s client base includes biotechnology firms, hedge funds and two weather-forecasting companies.
However, the same period has brought challenges as computing resources have become both more expensive and harder to obtain. Bernhardsson said the company expanded its search and discovered computing providers it had never encountered before. Modal now partners with 13 cloud service companies, compared to just five in the previous year.
The funding round occurred in two separate phases. Initial investors contributed at a $2.5 billion company valuation, but additional investor interest prompted Modal to raise a second portion at the higher $4.65 billion valuation. Accel and Menlo Ventures participated in the second funding phase.
