Key Takeaways Mercor raised $350 million at a $10 billion valuation, quintupling its worth since February 2025. The company now pays over $1.5 million per day to 30,000 contractors who train AI models...
San Francisco-based AI startup Mercor has secured $350 million in Series C funding at a $10 billion valuation, marking one of the most dramatic growth stories in Silicon Valley history.
The company, which connects specialized domain experts with major AI laboratories, has increased its valuation fivefold in just eight months.
The funding round was led by Felicis Ventures, which also led Mercor's previous $100 million Series B round in February at a $2 billion valuation. Existing investors Benchmark and General Catalyst participated, along with new investor Robinhood Ventures.
Mercor has positioned itself as an essential infrastructure provider for AI companies struggling to refine their models beyond basic pattern recognition.
The startup manages a network of over 30,000 specialized contractors, including scientists, doctors, lawyers, and other domain experts who earn an average of $85 per hour, helping train foundational AI models.
The company's blog post announcing the funding emphasized the ongoing limitations of artificial intelligence.
The company wrote that AI has advanced at an astonishing pace since Mercor's founding almost three years ago, but it still struggles with the subtleties that drive economically valuable work, including balancing trade-offs, understanding intent, developing taste, and deciding what should be done rather than just what can be done.
These human experts provide feedback that enables AI systems to learn nuance, judgment, and contextual understanding that cannot be captured through code alone. Mercor charges clients a finder's fee and hourly matching rate for connecting them with appropriate specialists.
Mercor's trajectory changed dramatically in June 2025 when Meta Platforms paid $14.3 billion for a 49% stake in Scale AI, one of the most prominent data-labeling companies in the industry.
As part of that deal, Scale AI's founder and CEO, Alexandr Wang, stepped down to join Meta, raising concerns among major AI laboratories about Scale's continued neutrality and ability to protect customer data.
Reports indicated that leading AI labs, including OpenAI and Google DeepMind, subsequently reduced their reliance on Scale AI, creating an immediate opportunity for competitors.
Mercor cofounder Adarsh Hiremath told Forbes about the market shift, saying it just doesn't happen too often in startups where your biggest competitor gets torpedoed overnight.
Mercor's revenue has reportedly quadrupled since Meta's investment in Scale AI. The company told investors it is on track to reach $500 million in annual recurring revenue faster than Anysphere, the startup behind AI coding assistant Cursor, which famously hit the same milestone roughly a year after its product launched.
Mercor was founded in 2023 by three former high school debate teammates from Bellarmine College Preparatory in San Jose, California.
CEO Brendan Foody, chief technology officer Adarsh Hiremath, and chief operating officer Surya Midha all dropped out of Georgetown University and Harvard University, respectively, during their sophomore years to pursue the startup full-time.
All three cofounders, now 22 years old, received Thiel Fellowships, which provide $100,000 grants to young entrepreneurs who forgo college to build companies.
The fellowship was established by billionaire investor Peter Thiel, who also became one of Mercor's early backers along with Twitter cofounder Jack Dorsey and former U.S. Treasury Secretary Larry Summers.
The company initially started as an AI-driven hiring platform that automated resume screening and candidate matching for technical positions.
However, in the process of building this service, Mercor inadvertently assembled a vast network of specialized professionals. Recognizing the greater opportunity in AI model training, the founders pivoted to their current business model.
With the new capital injection, Mercor plans to focus on three strategic areas.
The company will expand its global talent network across new disciplines and geographies, enhance its matching infrastructure to connect experts and clients more efficiently, and build automated tools to streamline collaboration between humans and AI systems.
The startup is also developing additional software infrastructure for reinforcement learning, a training method that enables AI models to incorporate feedback and improve over time.
Company materials indicate Mercor eventually intends to build an AI-powered recruiting marketplace, suggesting a potential return to its original vision with enhanced capabilities.
To support its growth ambitions, Mercor recently hired Sundeep Jain, Uber's former chief product officer with decades of industry experience, as its first president.
The company now employs more than 300 people worldwide, up from a small team operating primarily out of San Francisco.
Despite its rapid success, Mercor faces significant competition in the increasingly crowded AI training market.
Rival Surge AI is reportedly seeking up to $1 billion in new funding, while companies like Turing and Invisible Technologies have also achieved multi-billion-dollar valuations.
Scale AI recently filed a lawsuit against Mercor and a former Scale employee, alleging misappropriation of trade secrets and theft of confidential documents.
When asked about the company's future, CEO Foody told media outlets that an initial public offering could be on the horizon, though no specific timeline was provided.
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