Investors have reportedly offered to arrange a new funding round of $100 million for Mercor Inc. that would value the startup at upwards of $10 billion.

TechCrunch on Thursday cited sources as saying that Mercor has received multiple offers from prospective backers. The tipsters added that the company was holding discussions with those investors. Mercor Chief Executive Officer Brendan Foody (pictured, center, with co-founders Adarsh Hiremath and Surya Midha) dismissed the latter assertion in a statement.

Mercor supplies OpenAI, Nvidia Corp. and other tech firms with artificial intelligence training data. The data is prepared by what the company describes as a network of more than 300,000 experts. Besides access to relevant professionals, Mercor also provides tools that AI developers can use to manage data sourcing projects.

The company determines which expert to assign to what project based on multiple factors. If a customer orders a dataset that contains Python code, Mercor might recruit developers who have contributed to open-source Python applications hosted on GitHub. The company also evaluates work histories, Google Scholar citations and other parameters.

The $10 billion valuation that the prospective Mercor investors reportedly floated represents a steep increase from the $2 billion at which it was valued in February. The valuation jump is presumably tied to the company’s rapid sales growth. According to TechCrunch, Mercor’s annualized recurring revenue jumped from $100 million in March to over $450 million today.

The company’s annualized revenue figures reportedly describe the total amount that customers pay it for training data. Mercor disburses a significant percentage of the proceeds to the experts who prepare the data. According to its website, the company makes money by charging a flat percentage fee.

Mercor’s revenue growth may be driven partly by the customers who reportedly stopped working with rival Scale AI Inc. in June. That month, the latter company sold a 49% stake to Meta Platforms Inc. for $14.3 billion. The Facebook parent also hired Scale AI founder Alexandr Wang and several other key staffers.

This isn’t the only fast-growing AI data provider that competes with Scale AI. Surge AI Inc., another rival, is reportedly seeking a $1 billion funding round that could value it at $15 billion valuation. Its revenue reportedly topped $1 billion in 2024.

Mercor plans to differentiate its platform from rivals partly by launching new automation features. According to a June job posting, the company is working on AI tools that can help organizations recruit workers more efficiently. TechCrunch reported that Mercor also intends to develop an “AI-powered recruiting marketplace” and reinforcement learning software.

Photo: Mercor