Mercor, AI Expert Marketplace Connecting with Top Brands like OpenAI and Meta, Aims for $10 Billion Valuation in Series C Round Amidst Competitive Landscape
A leading AI connectivity platform, Mercor, is in negotiations with potential investors for a Series C funding round, according to two sources familiar with the discussions and a marketing document reviewed by multiple outlets.
Felicis Ventures, an existing investor, is reportedly considering increasing its stake in the company for this series. Felicis Ventures declined to comment on the matter.
The startup aims for a valuation of over $10 billion, according to one source. This surpasses the previous target valuation of $8 billion that was mentioned a couple of months ago, as per another source. However, the final terms may still undergo changes.
Potential investors have reportedly expressed interest in Mercor, with venture capitalists reaching out proactively with offers that value the company at up to $10 billion, according to previous reports.
Sources claim that Mercor has brought on board at least two new investors for this funding round through special purpose vehicles (SPVs).
Mercor announced its Series B round in February, raising $100 million at a $2 billion valuation, led by Felicis Ventures.
As of now, Mercor is estimated to generate around $450 million in annualized run-rate revenue, one source said. In February, the company informed TechCrunch that its annual revenue had reached $75 million at that time. In March, Mercor CEO Brendan Foody announced on X that the ARR had risen to $100 million.
Mercor claims to supply data labeling contractors to five top AI labs, including Amazon, Google, Meta, Microsoft, and OpenAI, as well as Tesla and Nvidia. According to sources, a significant portion of its revenue comes from a select group of these brands, particularly OpenAI.
To broaden its business model, Mercor has been discussing adding more software infrastructure for reinforcement learning – a training method that allows models or agents to receive feedback and improve over time. The company also plans to eventually develop an AI-powered recruiting marketplace.
However, Mercor faces competition from companies like Surge AI, which is reportedly in discussions for a funding round valued at $25 billion, as well as from Turing Labs and other data labeling firms like Scale AI that are also expanding into reinforcement learning services. Some speculate that OpenAI’s recently launched hiring platform could lead the AI giant to create its own human-expert-powered reinforcement learning training service.
When reached for comment, Foody stated, “We haven’t been actively fundraising,” and, “We turn down offers every month.” He also confirmed that the company’s revenue includes the total amount customers pay Mercor before contractors receive their share. This is a common accounting practice recommended by audit firms and followed by competitors such as Surge AI and Scale AI.
Mercor was co-founded in 2023 by Thiel Fellows and Harvard dropouts Brendan Foody (CEO), Adarsh Hiremath (CTO), and Surya Midha (COO). All three 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 extensive experience, as its first president, according to Forbes.
Mercor has been embroiled in a lawsuit by competitor Scale AI over allegations of trade secret misappropriation. Scale AI claims 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 reviewed by TechCrunch.
Maxwell Zeff contributed reporting.
