Startup Modal in Talks to Raise at $4.5 Billion Valuation After Revenue Surges
The Takeaway
- Modal seeks $4.5 billion valuation, an 80% premium to it last round.
- Startup’s annualized revenue surged to around $300 million.
- Demand for AI agent sandboxes fuels Modal’s rapid growth.
Modal, a startup that rents out Nvidia graphics processing units and software to help developers run and train models as well as agents, is in talks to raise money at around a $4.5 billion valuation. That would be an 80% premium to its last valuation from just a few months ago, according to two people with knowledge of the round.
The steep hike in valuation follows a jump in its annualized revenue to around $300 million, up five times from its pace last fall, one of the people with knowledge said. Much of that growth has stemmed from demand for Modal’s sandboxes, software environments in which developers can run AI agents and code without affecting the rest of their computer and code base, the person said.
Accel and existing investor Redpoint Ventures have been in talks to invest in the round, two of the people said. The round could raise between $150 million and $250 million. The five-year-old startup has previously raised more than $111 million in funding from investors including General Catalyst, Lux Capital and Amplify Partners.
The investor interest and surging revenue are signs of how AI agents such as Anthropic’s Claude Code and the open-source OpenClaw are generating demand for makers of software and hardware supporting the agents. Anthropic last month said its annualized revenue rate tripled from the end of 2025 to $30 billion, and it signed a series of deals with cloud providers like Amazon to support that growth. Annualized revenue for coding agent Cursor also nearly tripled from late last year to March.
Modal has benefited from the AI agent wave, as developers such as corporate expense startup Ramp and coding assistant Lovable use its sandbox software to ensure their agents don’t damage the rest of their computers or code base. Sandboxes are also crucial for the process of reinforcement learning, a method model makers use to improve AI by rewarding it for accomplishing certain goals and penalizing it for other behaviors.
Modal charges customers a subscription fee for a certain amount of credits they can use to rent out GPUs to run or train their models. Customers then pay more for extra use of chips and software.
Modal is one of a handful of startups, including Baseten, Fireworks AI and Together AI, that help AI developers get access to Nvidia GPUs and software for running the chips more efficiently.These startups have reported fast revenue growth and fetched multibillion-dollar valuations in the last year.
But they risk getting squeezed in other parts of their business. Demand for chips from the biggest AI developers like OpenAI and Anthropic has driven up spot prices for GPUs. Their scarcity could squeeze the margins of companies like Modal, which rent the GPUs from larger cloud providers before leasing them out to developers.
