Mercor Secures $350M Funding Amid AI Data Annotation Boom

Artificial intelligence services startup Mercor has announced a $350 million funding round, marking a significant milestone in its strategic shift toward AI data annotation and model training services. The investment was led by returning backer Felicis Ventures, with participation from Benchmark, General Catalyst, and new investor Robinhood Ventures.

Strategic Pivot Pays Off

Founded by three Thiel Fellows, Mercor originally focused on recruitment decision support before transitioning to its current core business: connecting high-skilled professionals with AI training opportunities. This shift proved timely following industry upheaval caused by Meta's $14.3 billion investment in competitor Scale AI.

"When Meta acquired a stake in Scale AI, it created immediate concerns about neutrality," explained Mercor co-founder Adash Hiremas. "Major labs like Google and OpenAI began seeking alternative providers almost overnight."

Scaling Operations Rapidly

The company currently manages:

• 30,000+ contract workers
• Daily payroll exceeding $1.5 million
• Specialized training for making AI responses more human-like

The fresh capital will be deployed across three key areas:

1. Expanding the talent network
2. Enhancing expert-task matching algorithms
3. Accelerating service delivery speeds

Intensifying Market Competition

The AI training sector has become increasingly competitive: | Competitor | Recent Valuation/Milestone | |------------|---------------------------| | Surge AI | Targeting $1B valuation | | Turing AI | Valued at $2.2B (March) | | Invisible Tech | Raised $100M at $2B+ valuation |

Key Points:

• $350 million funding positions Mercor for rapid expansion
• Business model shift addresses post-Scale AI market gap
• Company now handles massive workforce of specialized trainers
• Sector becoming crowded with well-funded competitors