On September 24, 2023, AI startup Modular announced a significant milestone, securing $250 million in a recent funding round. This investment has propelled the company's valuation to an impressive $1.6 billion, marking a nearly threefold increase in just two years. The funding round was spearheaded by the U.S. Innovative Technology fund, with participation from DFJ Growth and all existing investors, including GV, General Catalyst, and Greylock.
Founded in 2022 by a team of seasoned engineers from tech giants Apple and Google, Modular is pioneering a platform that enables developers to run their AI applications seamlessly across various computer chips. This innovative approach eliminates the need for developers to rewrite code for each chip, thus enhancing efficiency in the development process. Currently, Modular's platform supports cloud providers like Oracle and Amazon, as well as prominent chip manufacturers such as Nvidia and AMD.
Nvidia commands over 80% of the high-end AI chip market, largely due to its proprietary CUDA software, which has effectively locked more than 4 million developers into its ecosystem. In response, Modular has adopted what it refers to as a Switzerland strategy, aiming to act as a neutral software layer within the AI landscape. Chris Lattner, co-founder and CEO of Modular, emphasized that the company's mission is not to dethrone Nvidia but rather to foster a more equitable marketplace, allowing for broader competition among developers.
Modular plans to monetize its software by selling it directly to enterprises on a consumption basis while also forming revenue-sharing partnerships with cloud providers. This strategic approach has garnered interest from investors who foresee a multi-vendor future for AI hardware. Sam Fort, a partner at DFJ Growth, compared Modular's vision to that of VMware in the AI era, noting the company's ambition to create an AI hypervisor that facilitates workload portability across different vendors.
Currently employing around 130 people, Modular intends to utilize the newly acquired capital to bolster its engineering and go-to-market team. The funding will also support the company's expansion from its existing focus on AI inference into the burgeoning AI training market. With these investments, Modular is positioning itself as a formidable player in the evolving landscape of AI computing.
Reporting by Krystal Hu in San Francisco; Editing by Lincoln Feast.
