Modal Labsa startup specializing in AI inference infrastructure, is in the process of raising a new round in the amount of about $2.5 billion, according to four people with knowledge of the deal. If the deal closes on these terms, the funding round will more than double the company’s valuation $1.1 billion announced less than five months ago.

General Catalyst is in talks to lead the round, the people told TechCrunch. Modal’s annualized revenue run rate (ARR) is approximately $50 million, our sources said. Discussions are still early, and terms are subject to change.

Modal and General Catalyst did not respond to our requests for comment.

The model is focused on optimizing inference, the process of running trained AI models to generate answers from user requests. Improving the efficiency of inference can reduce computational costs and reduce the lag time between a user’s prompt and the AI’s response.

Modal is one of the few inference-focused companies attracting serious investor attention today. Last week, its competitor Baseten announced a $300 million increase at a $5 billion valuation, more than doubling the $2.1 billion valuation it reached just months before in September. Similarly, Fireworks AI, an inference cloud provider, raised $250 million at a $4 billion valuation in October.

In January, the creators of the open source inference project vLLM announced that they had transferred the tool to a VC-backed startup, Infeact, which raised $150 million in seed funding led by Andreessen Horowitz in a $800 million valuation. Meanwhile, TechCrunch reports that the team behind SGLang is doing business as RadixArk, which sources tell us has secured seed funding in a $400 million valuation led by Accel.

Modal was founded by CEO Erik Bernhardsson in 2021 after he spent more than 15 years building and leading data teams at companies including Spotify and Better.com, where he was CTO.

The startup counts Lux Capital and Redpoint Ventures among its backers.