Scale AI Seeks $25 Billion Valuation in Potential Tender Offer Amid AI Boom
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On Sat, 29 Mar, 8:03 AM UTC
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Scale AI seeking valuation as high as $25 billion in potential tender offer, Business Insider reports
March 28 (Reuters) - Artificial intelligence startup Scale AI is seeking a valuation as high as $25 billion in a potential tender offer as it looks to capitalize on the booming demand for the technology, Business Insider reported on Friday, citing multiple sources. Top tech companies are racing to build AI into their products and services. Startups catering to the surge in demand for AI chips and machine learning have been a bright spot in the private funding market. Terms of California-based Scale AI's tender offer, where investors and/or the company buy shares from existing shareholders, are being discussed and the final valuation could change, the report said. The startup, which was valued at nearly $14 billion in a funding round last year, did not immediately respond to Reuters' request for comment on the report. Founded in 2016, Scale AI is backed by tech giants Nvidia (NVDA.O), opens new tab, Amazon (AMZN.O), opens new tab and Meta (META.O), opens new tab. The company provides vast amounts of accurately labeled data, which is pivotal for training sophisticated tools like OpenAI's ChatGPT. The U.S. Department of Labor is investigating Scale AI for its compliance with the Fair Labor Standards Act. Reporting by Juby Babu in Mexico City; Editing by Shreya Biswas Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Society & EquityESG InvestorsSocial Impact
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Scale AI seeking valuation as high as $25 billion in potential tender offer: report
Top tech companies are racing to build AI into their products and services. Startups catering to the surge in demand for AI chips and machine learning have been a bright spot in the private funding market.Artificial intelligence startup Scale AI is seeking a valuation as high as $25 billion in a potential tender offer as it looks to capitalize on the booming demand for the technology, Business Insider reported on Friday, citing multiple sources. Top tech companies are racing to build AI into their products and services. Startups catering to the surge in demand for AI chips and machine learning have been a bright spot in the private funding market. Terms of California-based Scale AI's tender offer, where investors and/or the company buy shares from existing shareholders, are being discussed and the final valuation could change, the report said. The startup, which was valued at nearly $14 billion in a funding round last year, did not immediately respond to Reuters' request for comment on the report. Founded in 2016, Scale AI is backed by tech giants Nvidia, Amazon and Meta. The company provides vast amounts of accurately labeled data, which is pivotal for training sophisticated tools like OpenAI's ChatGPT. The US Department of Labor is investigating Scale AI for its compliance with the Fair Labor Standards Act.
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Nvidia-Backed Scale AI Reportedly Eyes $25 Billion Valuation In Tender Offer Amid Explosive Demand For Labeled Data And Machine Learning Tools - Meta Platforms (NASDAQ:META), Amazon.com (NASDAQ:AMZN)
Backed by companies like Nvidia Corp. NVDA, Amazon.com Inc. AMZN, and Meta Platforms Inc. META, Scale AI is reportedly seeking a valuation of up to $25 billion in a new tender offer. What Happened: Scale AI is in talks to launch a tender offer that could value the company at nearly double its previous valuation of $14 billion from last year, reported Business Insider, citing multiple sources who have seen the deal. The terms of the deal, where existing shares are sold by early investors or employees, are still being finalized, and the final valuation could fluctuate, the report noted. Founded in 2016, the San Francisco-based company plays a critical role in the AI ecosystem by providing high-quality labeled data, essential for training models like OpenAI's ChatGPT. However, the company is also facing scrutiny. The U.S. Department of Labor is reportedly investigating Scale AI's compliance with the Fair Labor Standards Act, raising questions about labor practices amid its rapid growth. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It's Important: On Friday, Elon Musk also acquired his social media platform X through xAI in a $33 billion deal. Last month, it was reported that Ilya Sutskever, OpenAI's co-founder and former chief scientist, is reportedly securing over $1 billion in funding for his AI startup, Safe Superintelligence (SSI), driving its valuation past $30 billion. SoftBank Group SFTBF SFTBY is also reportedly in discussions to lead a new funding round for OpenAI, aiming to raise $40 billion. This investment could push the ChatGPT creator's valuation to $300 billion, marking a record for private company funding. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Apple's iPad Turns 15 Today: Here's A Throwback To When Steve Jobs Explained Called It The 'Third Category' After Phones And Notebooks Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock AMZNAmazon.com Inc$192.66-4.32%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum75.92Growth94.54Quality77.18Value48.28Price TrendShortMediumLongOverviewMETAMeta Platforms Inc$575.58-4.48%NVDANVIDIA Corp$109.01-2.17%SFTBFSoftBank Group Corp$52.86-%SFTBYSoftBank Group Corp$25.68-2.21%Market News and Data brought to you by Benzinga APIs
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Scale AI seeking valuation as high as $25 billion in potential tender offer, Business Insider reports
(Reuters) - Artificial intelligence startup Scale AI is seeking a valuation as high as $25 billion in a potential tender offer as it looks to capitalize on the booming demand for the technology, Business Insider reported on Friday, citing multiple sources. Top tech companies are racing to build AI into their products and services. Startups catering to the surge in demand for AI chips and machine learning have been a bright spot in the private funding market. Terms of California-based Scale AI's tender offer, where investors and/or the company buy shares from existing shareholders, are being discussed and the final valuation could change, the report said. The startup, which was valued at nearly $14 billion in a funding round last year, did not immediately respond to Reuters' request for comment on the report. Founded in 2016, Scale AI is backed by tech giants Nvidia, Amazon and Meta. The company provides vast amounts of accurately labeled data, which is pivotal for training sophisticated tools like OpenAI's ChatGPT. The U.S. Department of Labor is investigating Scale AI for its compliance with the Fair Labor Standards Act. (Reporting by Juby Babu in Mexico City; Editing by Shreya Biswas)
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Scale AI, an AI startup backed by tech giants, is reportedly seeking a valuation of up to $25 billion in a potential tender offer, capitalizing on the surging demand for AI technology and data labeling services.
Scale AI's Ambitious Valuation Target
Scale AI, a prominent artificial intelligence startup, is reportedly seeking a valuation of up to $25 billion in a potential tender offer, according to sources cited by Business Insider 12. This move comes as the company aims to capitalize on the booming demand for AI technology and services. Founded in 2016, Scale AI has quickly become a key player in the AI ecosystem, providing crucial data labeling services for training sophisticated AI models 3.
Rapid Growth and Previous Valuation
The company's potential new valuation represents a significant jump from its previous valuation of nearly $14 billion in a funding round last year 124. This rapid increase reflects the explosive growth in the AI sector and the critical role that Scale AI plays in providing accurately labeled data for AI model training.
Backing from Tech Giants
Scale AI's impressive growth trajectory is supported by investments from major tech companies. The startup is backed by industry leaders including Nvidia, Amazon, and Meta Platforms 34. This backing not only provides financial support but also underscores the importance of Scale AI's services in the broader AI landscape.
Core Business and Market Position
Scale AI's primary business involves providing vast amounts of accurately labeled data, which is essential for training advanced AI tools like OpenAI's ChatGPT 13. As top tech companies race to integrate AI into their products and services, startups like Scale AI that cater to the surge in demand for AI-related technologies have become bright spots in the private funding market 2.
Tender Offer Details
The potential tender offer would allow investors and/or the company to buy shares from existing shareholders 12. However, it's important to note that the terms of the offer are still being discussed, and the final valuation could change 4. The company has not yet officially commented on the reported valuation target.
Industry Context and AI Funding Trends
Scale AI's potential valuation comes amid a broader trend of significant investments in AI companies. For instance, OpenAI is reportedly in discussions for a funding round that could value the company at $300 billion 3. This surge in AI valuations and investments highlights the growing importance and potential of AI technologies across various industries.
Regulatory Scrutiny
As Scale AI experiences rapid growth, it has also attracted regulatory attention. The U.S. Department of Labor is reportedly investigating the company for its compliance with the Fair Labor Standards Act 134. This investigation raises questions about labor practices in the fast-growing AI industry and could potentially impact the company's operations and valuation.
Market Implications
The high valuation sought by Scale AI reflects the critical role of data labeling and AI infrastructure companies in the broader AI ecosystem. As demand for AI technologies continues to grow, companies providing essential services like Scale AI are likely to see increased interest from investors and potential acquirers.
Reference
[2]
Scale AI Under Department of Labor Investigation for Potential Labor Law Violations
The U.S. Department of Labor is investigating Scale AI, a prominent AI data labeling startup, for potential violations of the Fair Labor Standards Act. The probe focuses on the company's labor practices, including contractor classification and pay rates.
6 Sources
6 Sources
OpenAI in Talks for Massive Funding Round, Potentially Valuing Company at $150 Billion
OpenAI, the artificial intelligence company behind ChatGPT, is reportedly in discussions for a new funding round that could value the company at $150 billion. This move comes as the AI race intensifies and development costs soar.
19 Sources
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OpenAI's $150 Billion Valuation: A Corporate Structure Revolution in the Making
OpenAI is exploring a radical corporate restructuring that could potentially value the company at $150 billion. This move aims to address employee compensation issues and align with the company's mission, but faces significant legal and practical challenges.
10 Sources
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Elon Musk's xAI in Talks for $10 Billion Funding Round, Valuing Company at $75 Billion
Elon Musk's AI startup xAI is reportedly seeking a $10 billion funding round, potentially valuing the company at $75 billion. The company is also nearing a deal with Dell for AI servers and preparing to release its latest AI model, Grok 3.
5 Sources
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Elon Musk's xAI Raises $5-6 Billion, Valuation Soars to $50 Billion for AI Supercomputer Expansion
Elon Musk's AI company xAI has raised $5-6 billion in a new funding round, valuing the company at $50 billion. The funds will be used to purchase 100,000 Nvidia chips to expand its AI supercomputer capabilities.
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