Modal Labs, a cloud-based infrastructure platform tailored for data teams and app developers, particularly those focused on generative AI applications, has successfully raised $16 million in a Series A funding round led by Redpoint Ventures. Other contributors to this investment include Amplify Partners, Lux Capital, and Definition Capital. This latest funding boosts Modal's total capital to $23 million, with plans to primarily direct the resources towards expanding its workforce, as shared by co-founder and CEO Erik Bernhardsson. The aim is to grow Modal's current team of 14 to 17 employees by year-end, focusing on the recruitment of software engineers.
Founded in 2021, Bernhardsson's journey into establishing Modal Labs stems from over 15 years of experience in building and managing data teams. Notably, during his tenure at Spotify, he played a pivotal role in creating the music recommendation system and later served as the CTO of fintech company Better.com. Although concerns about his time at Better.com arise due to the company's complicated history with layoffs and executive turnover, Bernhardsson assures he departed long before these controversies unfolded.
After leaving Better.com in 2021, Bernhardsson identified significant shortcomings in the existing data engineering tools, particularly for large organizations. Driven to create a solution, he raised a $7 million seed round by early 2022 and assembled a dedicated team.
Today, Modal empowers data teams and engineers to execute code in the cloud without the complexities of configuring the required infrastructure. Utilizing a custom-built container system designed in Rust, Modal's platform can scale to hundreds of GPUs in mere seconds, according to Bernhardsson.
Developers can describe container images—comprehensive packages of software necessary for running applications—and hardware specifications through code. They only incur costs based on the compute power consumed and benefit from an observability dashboard, which provides real-time logs and metrics.
A peek into the Modal Labs dashboard reveals advanced app deployment controls. “The surge in demand for AI, especially in deploying generative AI models on GPUs, signifies that data and AI are becoming integral to the software architecture,” Bernhardsson commented. “At Modal Labs, our mission is to enhance our foundational offerings and create a comprehensive tech stack designed specifically for data teams.”
Modal Labs recently transitioned from beta to general availability, marking an exciting new chapter for the young startup. However, it faces competition, notably from Google Colab, which has recently introduced an enterprise tier.
Despite the competitive landscape, Modal has already gained traction with several well-known brands, such as Substack and Ramp, which employ the platform for large-scale data projects and cutting-edge AI audio transcription features, respectively.
According to a source familiar with the company's performance, Modal’s monthly revenue currently sits in the “six digits”—a promising milestone for an emerging startup. “Data teams are often hindered by fragmented and cumbersome tools, necessitating the integration of multiple platforms,” Bernhardsson noted. “Modal addresses this challenge by enabling startups in the application space to execute code seamlessly in the cloud while eliminating the burdens of infrastructure management.”
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