Mercor Sets Sights on $10B Valuation Amid Booming AI Training Demand

Mercor, the rapidly growing AI training startup, is reportedly seeking a valuation of over $10 billion as it nears a $450 million annual revenue run rate. The company, known for supplying domain experts to leading AI labs, is in advanced talks with investors for a Series C funding round, according to multiple sources familiar with the negotiations.

Key Highlights

• Series C in Progress: Mercor is in discussions with investors, including returning backer Felicis, for a new funding round. The targeted valuation has climbed from $8 billion to more than $10 billion within a few months.
• Surging Revenue: The startup’s annualized revenue has rocketed to $450 million, up from $75 million earlier this year. CEO Brendan Foody claims ARR is even higher, with Mercor on pace to hit the $500 million milestone faster than competitors.
• Profitable Growth: Unlike many AI startups, Mercor reportedly generated $6 million in profit during the first half of the year.
• Elite Clientele: Mercor provides expert contractors to five of the world’s top AI labs, including Amazon, Google, Meta, Microsoft, and OpenAI, as well as industry giants like Tesla and Nvidia.
• Business Evolution: The company is expanding its offerings to include software infrastructure for reinforcement learning and is working toward building an AI-powered recruiting marketplace.

How Mercor’s Business Works

Mercor connects companies with highly specialized domain experts—such as scientists, doctors, and lawyers—to train and refine AI models. It earns revenue by charging an hourly finder’s fee and matching rate for these expert services. A significant portion of its revenue reportedly comes from a subset of major clients, including OpenAI.

Competitive Landscape

The AI training and data labeling space is heating up. Mercor faces stiff competition from firms like Surge AI (currently raising at a $25 billion valuation), Turing Labs, and Scale AI. Additionally, OpenAI has announced its own AI-powered hiring platform, which could eventually compete directly with Mercor’s services.

Leadership and Growth

Mercor was founded in 2023 by Thiel Fellows and Harvard dropouts Brendan Foody (CEO), Adarsh Hiremath (CTO), and Surya Midha (COO), all of whom are still in their early twenties. Recently, the company brought on Sundeep Jain, former chief product officer at Uber, as its first president to help scale operations.

Legal Challenges

The company is currently facing a lawsuit from competitor Scale AI over alleged misappropriation of trade secrets. Scale AI claims that a former employee, now at Mercor, took confidential documents related to customer strategies and proprietary information.

What’s Next?

As Mercor accelerates its revenue and expands its services, all eyes are on its next moves in both technology and business development. With a rapidly growing client base and a push toward profitable, diversified offerings, the startup is positioning itself as a major player in the next wave of AI innovation.

References

• TechCrunch: Sources: AI training startup Mercor eyes $10B+ valuation on $450 million run rate
• The Information: Mercor fields $10 billion valuation offers
• TechCrunch: Mercor raises $100M at $2B valuation
• Brendan Foody on X
• Forbes: Saving Lives at Scale
• TechCrunch: Cursor’s Anysphere soars past $500M ARR
• Bloomberg: Surge AI in talks for $25B valuation
• TechCrunch: OpenAI announces AI-powered hiring platform
• TechCrunch: Scale AI sues Mercor over trade secrets