Modal Labs, a provider of AI inference infrastructure, is close to securing a $750 million funding round led by Accel, with a valuation reaching $15.75 billion including this investment, as per a source familiar with the funding process. The specifics of the round have not been reported before, although Axios and Bloomberg have provided other information regarding the deal.

This new funding will more than triple Modal’s valuation from the $4.65 billion it achieved when it announced a $355 million fundraising just four months prior.

Modal Labs opted not to provide comments.

The agreement occurs against a backdrop of increasing demand for inference services, which involve executing an AI model that is already trained to produce outputs, especially from clients using open-source models. Other startups focused on inference are also negotiating for new investments at much higher valuations. Baseten is approaching a capital raise at a valuation of $26 billion, which would be double its worth in June, according to Bloomberg. Additionally, Fireworks and Fal, a startup offering inference for video and image generation, have been in discussions with investors regarding new rounds that would significantly elevate their valuations, as reported by The Information.

Despite rapid revenue growth for these companies, their profit margins are slim, largely due to the high costs associated with acquiring or leasing computing resources. Fireworks revealed in July that its annualized revenue reached $1 billion, a fivefold jump from the previous year. Multiple startups focused on inference are anticipated to achieve this revenue milestone by year’s end, per our source.

Founded in 2021 by CEO Erik Bernhardsson and CTO Akshat Bubna, Modal has roots in significant industry experience. Bernhardsson, a Swede, spent over 15 years developing data teams at firms such as Spotify, where he contributed to the creation of the music-streaming service’s recommendation system, and Better.com, an online mortgage lender, where he was the chief technology officer. Bubna has a background in math and computer science from MIT and was an early staff engineer at Scale AI, the data-labeling startup, prior to co-founding Modal.

Based in New York and employing around 150 people, the company enables developers to train AI models and execute other resource-intensive workloads without the need to manage their own servers. Its website features customers such as the coding company Cognition, the AI music generator Suno, the fintech firm Ramp, and the publishing platform Substack.

As of May, Modal reported to Reuters that it had exceeded $300 million in annualized revenue.

The discussions for fundraising come two months after Modal became involved in one of the AI industry’s most scrutinized security incidents. In late July, Modal revealed that a customer’s data was compromised during the same hacking campaign conducted by a rogue OpenAI agent against Hugging Face.

Modal’s Chief Technology Officer Akshat Bubna stated that the breach was linked to a vulnerability in the customer’s own code, not Modal’s systems. “We’re aware a Modal customer published an unauthenticated endpoint that allowed anyone on the internet to use their sandboxes for code execution,” Bubna noted in a statement to media at that time. “This was exploited by the rogue agent. Modal’s platform was not compromised in any way,” he added.