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Modal — AI Compute and Infrastructure · fobi

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Modal

Serverless cloud for AI and data workloads that lets engineers run Python at scale on pooled CPUs and GPUs with sub-second container starts and per-second billing. Founded in 2021 by Erik Bernhardsson — former CTO of Better.com and creator of Spotify's recommendation system and the Annoy library — and Akshat Bubna, Modal exposes compute as a Python decorator: wrap a function, deploy it, and Modal handles containerization, scheduling, autoscaling, and GPU provisioning. The company raised an $87M Series B led by Lux Capital in September 2025 at a $1.1B post-money, and as of February 2026 was reportedly in talks for a new round at a $2.5B valuation.

Modal has become the default compute substrate for AI-native teams that don't want to manage Kubernetes or GPU reservations — a fast-growing alternative to AWS for the next generation of inference, fine-tuning, and agent workloads.

modal.com AI Compute and Infrastructure

United Statesprivate

At a glance

Total raised

$111M

last round series b

Headcount

51-200

approximate · public range

Headquarters

New York

United States

Founded

2021

5 years active

Status

Private

AI Compute and Infrastructure

Latest valuation

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AI bull / bear

Bull case

Modal owns the most defensible position in serverless AI compute: sub-second container cold starts built on a custom file system and snapshotting stack make scale-to-zero GPU workloads actually viable, and that engineering is the kind generic clouds have not matched. Per-second billing aligns Modal's revenue with the fastest-growing line item in software budgets, and consumption compounds without sales effort as customers' AI products grow. Sandboxes ride the steepest curve in the sector: every coding agent and agent platform needs isolated execution for untrusted model-generated code, and Modal sells that by the second too. The company is capital-efficient by AI-infrastructure standards — $111M raised against a $1.1B September 2025 Series B mark, with reported talks at $2.5B just five months later — and Erik Bernhardsson's developer credibility from Spotify's recommendation system and the Annoy library gives it authentic bottoms-up pull. If AI-native teams keep choosing a Python decorator over Kubernetes and GPU reservations, Modal becomes the default runtime for the post-AWS generation of AI products.

Bear case

Modal is squeezed from both ends of the stack. Above it, hyperscalers fold serverless GPU offerings into committed-spend agreements enterprises already hold; below it, GPU clouds rent raw capacity at prices a premium per-second layer cannot match for steady-state workloads. That exposes the graduation problem: serverless economics shine for bursty, early-stage workloads, but once a customer's inference traffic stabilizes, reserved capacity gets cheaper and the largest spenders negotiate direct — Modal's best customers are structurally the most likely to leave, the Heroku pattern replayed for GPUs. Consumption revenue also cuts both ways: it falls as fast as it rises, with no seat-based floor, and Modal carries the utilization risk of its pooled fleet, because idle GPUs are Modal's cost, not the customer's. The Sandboxes line faces dedicated competitors like E2B and the prospect of labs building isolation in-house. And a reported $2.5B valuation discussion months after an $87M Series B prices in flawless execution in a market where the underlying substrate — GPU compute — is being commoditized by everyone simultaneously.

Generated by editorial-sourced · June 12, 2026Refreshes quarterly · see disclosures