Another AI Cloud Startup Becomes a Unicorn

Lately, investors have been eager to back cloud startups that provide application developers with access to Nvidia graphics processing units and help them to develop and run AI models quickly. The investor interest comes despite questions about the profit margins of these startups, otherwise known as cloud GPU resellers or inference providers.

In a previously unreported example, Modal, a New York City-based inference provider, is in talks to raise roughly $75 million in funding at a $1 billion pre-money valuation led by existing investor Lux Capital, according to two people with direct knowledge of the deal. (Modal made The Information’s list of the most promising startups in 2023.)

As of March, Modal was generating $3.3 million in revenue monthly, or nearly $40 million in revenue on an annualized basis, one of these people said. That’s a similar pace to another inference provider, Baseten, which was generating $30 million in annualized revenue as of March, according to a person with knowledge of its financials. (As of the end of the second quarter, Baseten had grown to $50 million in annualized revenue, the person added.)