Modal Labs, a platform that provides cloud-based infrastructure to data teams and app developers, particularly those creating generative AI applications, has raised $16 million in a Series A funding round led by Redpoint Ventures, with participation from Amplify Partners, Lux Capital and Definition Capital.
The cash infusion, which brings Modal’s total raised to $23 million, will be put mainly toward hiring, according to co-founder and CEO Erik Bernhardsson. Modal plans to grow its team of 14 employees to 17 by the end of the year, with a focus on recruiting software engineers.
Bernhardsson started Modal Labs in 2021 after a 15-plus-year career building and leading data teams. While working for Spotify, Bernhardsson was responsible for building the music recommendation system. Later, he became the CTO of fintech firm Better.com.
Learning of Bernhardsson’s Better.com stint gave this reporter pause, frankly, considering Better.com’s history of botched layoffs, poor treatment of current and former employees, financial missteps and high-profile executive departures. But Bernhardsson claims he left the company “quite a while” before any of that decision making.
Whatever the case, after leaving Better.com in 2021, Bernhardsson came to believe that the current landscape of data engineering tools wasn’t adequate to solve many of the challenges facing large organizations. He began hacking away at a solution, and by early 2022, he’d raised a $7 million seed round and hired a small team.
Modal as it exists today allows data teams and engineers to run code in the cloud without having to configure or set up the necessary infrastructure. Using a custom-built container system coded in Rust, Modal’s platform can scale to hundreds of GPUs in as little as “seconds,” Bernhardsson claims.
Developers express container images (i.e. packages of software containing everything needed to run an app) and hardware specs in code. They pay only for the compute power they use, and get an observability dashboard that shows real-time logs and metrics.
“Recent demand driving AI adoption, like deploying generative AI models on GPUs, mean data and AI are becoming an increasingly large part of the software stack,” Bernhardsson said. “Modal Labs’ goal is to continue to build upon this core offering and create an end-to-end tech stack for data teams.”
Modal’s just now moving out of beta into general availability; it’s early days. And it’s not without competitors in the space, namely Google Colab, which recently launched an enterprise tier.
But it’s already been adopted by at least a few notable brands, including Substack and Ramp, which have been leveraging the platform to run big data projects and an AI-powered audio transcription feature, respectively.
A source familiar with the matter tells TechCrunch that Modal’s per-month revenue is in the “six digits” — a healthy place to be for a young startup.
“The suite of tools that data teams currently rely on are fragmented and tedious to use, requiring stitching together multiple different tools and platforms. This results in a loss of productivity and, ultimately, higher costs,” Bernhardsson said. “Modal serves the startups building applications in this space by allowing them to run code in the cloud, without the hassle of managing their own infrastructure.”
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