Investors propose $10B valuation for AI data startup Mercor

According to reports, investors have proposed a new USD 100 million funding round for Mercor Inc., which would value the startup at over USD 10 billion.

Sources indicate that Mercor has received proposals from multiple potential investors, and discussions are reportedly ongoing between the company and these investors. Mercor CEO Brendan Foody denied the claims in a statement, pictured above with co-founders Adarsh Hiremath and Surya Midha.

Mercor supplies artificial intelligence training data to companies such as OpenAI and Nvidia. The data is prepared by what the company describes as a network of over 300,000 experts. In addition to granting access to relevant professionals, Mercor also offers tools that AI developers can use to manage data procurement projects.

The company determines which expert is assigned to which project based on various factors. For example, if a client orders a dataset containing Python code, Mercor might recruit developers who have previously contributed to open-source Python applications on GitHub. The company also evaluates work history, Google Scholar citations, and other parameters.

Reportedly, the proposed USD 10 billion valuation by potential Mercor investors marks a significant increase compared to its USD 2 billion valuation in February. This jump in valuation may be linked to the company’s rapid sales growth. According to TechCrunch, Mercor’s annualized recurring revenue surged from USD 100 million in March to over USD 450 million today.

The reported annualized revenue figure represents the total amount clients pay for training data. A large portion of Mercor’s earnings is allocated to the experts who prepare the data. As stated on its website, the company generates profit by charging a fixed percentage fee.

Mercor’s revenue growth may have been partly driven by clients reportedly shifting away from competing company Scale AI Inc. in June. That month, Scale AI sold 49% of its stake to Meta Platforms Inc. for USD 14.3 billion. The parent company of Facebook also hired Scale AI founder Alexandr Wang and several other key employees.

Mercor isn’t the only fast-growing AI data provider competing with Scale AI. Another rival, Surge AI Inc., is reportedly seeking USD 1 billion in funding, which could value the company at USD 15 billion. It has also been reported that its revenue is expected to exceed USD 1 billion in 2024.

Mercor aims to differentiate its platform from competitors in part by launching new automation features. According to a job posting in June, the company is developing AI tools intended to help organizations hire employees more efficiently.