Young people playing on Xbox during one of the breaks of a tech conference held this year in San Francisco (illustrative image), PHOTO: Shutterstock
Mercor, a startup that has become a key element in the ecosystem helping to improve the best-performing artificial intelligence (AI) models, has completed a new financing deal that values the company at $10 billion, The Wall Street Journal reports, citing sources familiar with the situation.
The $10 billion valuation is five times what the company was worth in February, before it turned to one of the most lucrative areas of the artificial intelligence boom: hiring thousands of corporate professionals to train the very systems that could one day replace or complement their work.
Mercor, whose client list includes AI heavyweights such as Anthropic and OpenAI, is set to raise another $350 million, according to WSJ sources. Co-founded in 2023 by three former college dropouts, Mercor coordinates 30,000 collaborators globally who tag images, write sentences and provide expert feedback to help AI-powered chatbots learn to “think” and speak like humans.
The WSJ notes that the startup's rapid rise underscores the “investment fever” in AI that has gripped venture capital firms, where investors are eager to fund founders at huge valuations for fear of missing out on the next tech giant.
The three founders of Mercor are a little over 20 years old
Brendan Foody, Mercor's 22-year-old CEO, met the company's other two founders, Adarsh Hiremath and Surya Midha, when they were in high school in the San Francisco Bay Area. Hiremath is Mercor's chief technology officer, and Midha announced earlier this month that he will transition from chief operating officer to chairman of the board.
All three co-founders dropped out of college to found Mercor. Shortly after leaving school, they became Thiel Scholars, a program created by investor Peter Thiel that funds companies founded by young college dropouts.
Mercor originally started as an HR and recruiting startup. It used artificial intelligence to automate the analysis of CVs, evaluate applicants and match them with the best roles for them and the company. It focused especially on technical jobs, from software engineers to mathematicians.
As part of this, the company has built a vast network of skilled workers, which big AI companies have been increasingly eager to tap into to train increasingly sophisticated chatbots and keep up with the race to develop artificial intelligence.
To meet the needs of these companies, Mercor has expanded its network of collaborators to include lawyers, doctors, bankers and journalists. To support this strategic shift, Mercor recruited former Uber chief product officer Sundeep Jain as its first president in May.
The company was indirectly helped by the giant led by Mark Zuckerberg
Mercor also got an indirect boost after Meta Platforms, the company founded and run by Mark Zuckerberg, paid $15 billion in June for a 49 percent stake in Scale AI, one of the best-known data tagging startups.
This transaction pushed the value of Scale AI to a staggering $29 billion. As part of the deal, the company's co-founder and CEO Alexandr Wang moved to the social media giant to help lead its AI efforts.
But some of Scale's customers and competitors have expressed concern about the startup's ability to remain neutral and protect customer data after Meta's investment.
As a result, the deal has turned out to be a big boon for rival Mercor: The student-founded company's revenue has quadrupled since Meta's investment in Scale, according to WSJ sources.
