AI Training Startup Mercor Eyes $10B+ Valuation Amid Explosive Growth

Exclusive: AI training startup Mercor eyes $10B+ valuation on $450 million run rate, sources say

Mercor, a startup that connects companies like OpenAI and Meta with domain experts needed to train and refine their foundational AI models, is in discussions with investors for a Series C round, according to a marketing document viewed by TechCrunch and two sources familiar with the deal talks. Felicis, a returning investor, is considering doubling down on the company for the Series C, according to two sources. Felicis declined to comment. The company is currently targeting a valuation of $10 billion or more, one person said. That's up from an $8 billion target valuation that the company discussed a couple of months ago, one person said. However, terms of the final deal could still change. The company has told potential investors that it already has multiple offers. VCs have been reaching out to Mercor preemptively with offers valuing the company at as much as $10 billion, the Information previously reported. TechCrunch also understands that the company has brought on at least two new investors to raise funds for the potential deal through special purpose vehicles (SPVs). The company's previous round was announced in February - a $100 million Series B at a $2 billion valuation led by Felicis. Founded in 2022, Mercor is approaching $450 million in annualized run-rate revenue, one person said. The company told TechCrunch in February that its annual revenue (calculated by multiplying the latest month by 12) had reached $75 million at that time. In March, Mercor CEO Brendan Foody posted on X that ARR was $100 million. The company has told investors it is on track to hit the $500 million ARR milestone faster than Anysphere, the startup that makes AI coding assistant Cursor, according to one source familiar with the situation. Anysphere famously hit $500 million in ARR about a year after its product launched. Unlike Anysphere, which is still burning cash, Mercor generated $6 million in profit in the first half of the year, Forbes reported. Mercor earns revenue by providing companies with specialized domain experts to perform AI model training -- such as scientists, doctors, and lawyers -- and charging an hourly finder's fee and matching rate for their work. The company claims to supply data labeling contractors to five top AI labs, including Amazon, Google, Meta, Microsoft, and OpenAI, as well as to Tesla and Nvidia. According to sources, an outsized portion of its revenue is coming from a subset of those brands, including OpenAI. To further diversify its business model, Mercor has been telling investors that it is adding more software infrastructure for reinforcement learning - a training method where a model or agent's decisions are verified or disputed, enabling it to incorporate feedback and improve over time. The company also intends to eventually build an AI-powered recruiting marketplace. Still, Mercor faces competition from companies like Surge AI, which is reportedly in talks to raise funding at a $25 billion valuation, as well as from Turing Labs and other data labeling firms like Scale AI that are also expanding into RL services. Some believe that OpenAI's recently launched hiring platform could lead the AI giant to create its own human-expert-powered RL training service. When reached for comment, Foody told TechCrunch, "We haven't been trying to raise at all," and, "We turn down offers every month." He also said the company's ARR is higher than $450 million. However, he clarified that the company's revenue includes the total amount that customers pay Mercor for services before its contractors receive their portion. He added this is a common accounting practice recommended by audit firms and used by competitors Surge AI and Scale AI. The startup was co-founded in 2023 by Thiel Fellows and Harvard dropouts Brendan Foody (CEO), Adarsh Hiremath (CTO), and Surya Midha (COO). All three co-founders are still in their early twenties. To take the company to the next level, Mercor recently appointed Sundeep Jain, a former chief product officer at Uber with decades of experience, as its first president, Forbes reported. Mercor was recently sued by competitor Scale AI for misappropriation of trade secrets. Scale AI alleges that one of its former employees who later joined Mercor "stole more than 100 confidential documents concerning Scale's customer strategies and other proprietary information," according to a copy of the lawsuit TechCrunch previously reviewed.

Report: Investors offered to fund AI data startup Mercor at $10B valuation - SiliconANGLE

Report: Investors offered to fund AI data startup Mercor at $10B valuation Investors have reportedly offered to arrange a new funding round for Mercor Inc. that would value the startup at upwards of $10 billion. TechCrunch on Thursday cited sources as saying that Mercor has received multiple offers from prospective backers. The tipsters added that the company was holding discussions with those investors. Mercor Chief Executive Officer Brendan Foody (pictured, center, with co-founders Adarsh Hiremath and Surya Midha) dismissed the latter assertion in a statement. Mercor supplies OpenAI, Nvidia Corp. and other tech firms with artificial intelligence training data. The data is prepared by what the company describes as a network of more than 300,000 experts. Besides access to relevant professionals, Mercor also provides tools that AI developers can use to manage data sourcing projects. The company determines which expert to assign to what project based on multiple factors. If a customer orders a dataset that contains Python code, Mercor might recruit developers who have contributed to open-source Python applications hosted on GitHub. The company also evaluates work histories, Google Scholar citations and other parameters. The $10 billion valuation that the prospective Mercor investors reportedly floated represents a steep increase from the $2 billion it was worth in February. The valuation jump is presumably tied to the company's rapid sales growth. According to TechCrunch, Mercor's annualized recurring revenue jumped from $100 million in March to over $450 million today. The company's annualized revenue figures reportedly describe the total amount that customers pay it for training data. Mercor disburses a significant percentage of the proceeds to the experts who prepare the data. According to its website, the company makes money by charging a flat percentage fee. Mercor's revenue growth may be driven partly by the customers who reportedly stopped working with rival Scale AI Inc. in June. That month, the latter company sold a 49% stake to Meta Platforms Inc. for $14.3 billion. The Facebook parent also hired Scale AI founder Alexandr Wang and several other key staffers. Mercor is not the only fast-growing AI data provider that competes with Scale AI. Surge AI Inc., another rival, is reportedly seeking a $1 billion funding round that could value it at $15 billion valuation. Surge AI's revenue reportedly topped $1 billion in 2024. Mercor plans to differentiate its platform from rivals partly by launching new automation features. According to a June job posting, the company is working on AI tools that can help organizations recruit workers more efficiently. TechCrunch reported that Mercor also intends to develop an "AI-powered recruiting marketplace" and reinforcement learning software.

Peter Thiel-Backed Fellows' Startup Mercor Targets $10 Billion Valuation As OpenAI, Meta, Tesla Turn To Its AI Training Experts: Report - Alphabet (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN)

Mercor, founded by three Thiel Fellows who dropped out of Harvard, is reportedly pursuing a Series C funding round targeting a $10 billion valuation amid surging demand from artificial intelligence companies for specialized training experts. Series C Funding Round Targets Record Valuation The company has increased its valuation target from $8 billion discussed months earlier. Multiple venture capital firms have proactively approached Mercor with offers reaching the $10 billion threshold, though final terms remain subject to change, TechCrunch reported, citing sources. Returning investor Felicis is considering doubling down on the investment, according to the report. Mercor did not immediately respond to Benzinga's request for comment. See Also: Microsoft Scraps Pandemic-Era Flexibility, Orders Workers Back To Office 3 Days A Week In 2026 As AI Push Demands More Collaboration Revenue Growth Accelerates Amid AI Boom Founded in 2022, Mercor approaches $450 million in annualized run-rate revenue, representing explosive growth from $75 million ARR reported in February. CEO Brendan Foody posted on X in March that ARR had reached $100 million. Mercor earns revenue by providing specialized contractors -- scientists, doctors and lawyers -- to perform AI model training for an hourly finder's fee and matching rate. The company serves five major AI labs including Amazon.com Inc. AMZN, Alphabet Inc. GOOGL GOOG, Meta Platforms Inc. META, Microsoft Corp MSFT, OpenAI, Tesla Inc. TSLA and NVIDIA Corp NVDA. Young Founders Scale Rapidly The startup was co-founded in 2023 by Thiel Fellows Foody, Adarsh Hiremath (CTO) and Surya Midha (COO). All three remain in their early twenties. Peter Thiel's influence on Silicon Valley extends through his $100,000 fellowship program, which pays young innovators to skip college and pursue entrepreneurship. The PayPal Holdings Inc. PYPL co-founder has famously compared elite universities to "Studio 54 nightclubs" and called higher education a bubble, arguing students get trapped in debt without meaningful returns. To support growth, Mercor appointed former Uber chief product officer Sundeep Jain as its first president. The move signals the company's transition from startup to established enterprise. Competition Intensifies in AI Training Market Mercor faces competition from Surge AI, reportedly seeking funding at a $25 billion valuation, and established players like Scale AI and Turing Labs expanding into reinforcement learning services. Scale AI recently sued Mercor for alleged trade secret misappropriation, claiming a former employee "stole more than 100 confidential documents concerning Scale's customer strategies," according to court filings reviewed by TechCrunch. Despite competitive pressures, Foody told TechCrunch the company "hasn't been trying to raise at all" and "turns down offers every month." He confirmed ARR exceeds $450 million but clarified revenue figures include total customer payments before contractor compensation. Read Next: Trump Faces Corporate Pushback As 122 American Companies In China Demand Tariff Relief Amid Revenue Volatility Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Mark Reinstein On Shutterstock.com AMZNAmazon.com Inc$236.72-0.64%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum76.00Growth92.37Quality62.75Value45.02Price TrendShortMediumLongOverviewGOOGAlphabet Inc$240.060.05%GOOGLAlphabet Inc$239.59-0.02%METAMeta Platforms Inc$764.52-0.15%MSFTMicrosoft Corp$498.43-%NVDANVIDIA Corp$173.961.87%PYPLPayPal Holdings Inc$67.65-0.04%TSLATesla Inc$348.500.44%Market News and Data brought to you by Benzinga APIs