Sources: AI training startup Mercor eyes $10B+ valuation on $450 million run rate

Mercor, a startup that connects companies such as OpenAI and Meta with domain experts needed to train and refine their fundamental AI models, is in discussion with investors for a series C -round, according to a marketing document viewed by WAN and two sources that are known with the deal conversations.

Felicis, a recurring investor, is considering double the company for the series C, according to two sources. Felicis refused to comment.

The company is currently focusing on a valuation of $ 10 billion or more, one person said. That is an objective of a target rating of $ 8 billion that the company discussed a few months ago, one person said. However, conditions of the final deal can still change.

The company has told potential investors that it already has several offers. VCs have contacted Mercor preventively with offers that appreciate the company as much as much as $ 10 billionThe previously reported information.

WAN also understands that the company has delivered at least two new investors to raise money for the potential deal via special vehicles (SPVs).

The previous round of the company was announced in February – a series B of $ 100 million on a rating of $ 2 billion led by Felicis.

Mercor was founded in 2022 and is approaching $ 450 million in annual Run rate income, one person said. The company told WAN in February that the annual turnover (calculated by multiply by 12 in the last month) had reached $ 75 million at that time. In March, Mercor CEO Brendan Foody placed on X that was Arr $ 100 million.

The company has told investors that it is on its way to get the ARR mile pole of $ 500 million faster than Anysphere, The startup that AI coding assistant cursor makes, according to a source that is familiar with the situation. Anysphere hit $ 500 million in ARA about a year after the product was launched. Unlike Anysphere, who still burns cash, Mercor generated $ 6 million in profit in the first half of the year, Forbes reported.

Mercor earns income by offering companies specialized domain experts to conduct AI modelt training – such as scientists, doctors and lawyers – and charging the reimbursement of one hour and the matching of a hourly finder for their work.

The company claims contractors for labeling data tennis at five Top AI Laboratories, including Amazon, Google, Meta, Microsoft and OpenAi, as well as Tesla and Nvidia. According to sources, a large part of the income comes from a subset of those brands, including OpenAi.

To further diversify his business model, Mercor has told investors that it adds more software infrastructure for learning reinforcement – a training method in which a model or decisions of an agent are verified or disputed, so that the feedback can be recorded and improve over time. The company is also planning to build an AI-driven recruitment market.

Nevertheless, Mercor is confronted with competition from companies such as Surge AI, who is reportedly in discussions to raise financing at a $ 25 billion ratingAs well as Turing Labs and other data companies such as AI scale that also expand to RL services. Some believe that the recently launched recruitment platform of OpenAI could lead the AI ​​Giant to create his own RL training service for human expert.

When he was reached for comment, Foody told WAN: “We didn’t try to raise” and: “We reject every month.” He also said that the Arr of the company is higher than $ 450 million. However, he clarified that the company’s turnover includes the total amount that customers pay Mercor for services before the contractors receive their share. He added that this is a common accounting practice that is recommended by audit companies and used by competitors Surge AI and Scale AI.

The startup was co-founder 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 the early twenties. To bring the company to the next level, Mercor recently appointed Sundeep Jain, a former Chief Product Officer at Uber with decades of experience, such as the first president, Forbes reported.

Mercor was recently sued by competitors’ scale AI for embezzlement of commercial secrets. Scale AI claims that one of the former employees who later became members of Mercor “stolen more than 100 confidential documents with regard to the customer strategies of the scale and other own information,” said a copy of the previously assessed lawsuit WAN.

Maxwell Zeff has contributed reporting