Mercor Eyes $10 Billion Valuation Amid Accelerating Revenue Growth
Mercor, a startup specializing in connecting AI companies with domain experts essential for training foundational models, is currently engaged in Series C funding discussions aiming for a valuation exceeding $10 billion. This marks a significant increase from its earlier target of $8 billion, reflecting the company’s rapid expansion and strong market interest.
Strong Revenue Momentum and Investor Interest
Founded in 2022, Mercor has rapidly scaled its business, approaching an annualized run rate (ARR) near $450 million. The company reported $75 million ARR as of February 2025 and indicated growth to $100 million ARR by March. Sources reveal that Mercor is on track to surpass $500 million ARR faster than peers like Anysphere, which achieved the milestone roughly one year post-launch. Unlike some competitors still operating at a loss, Mercor generated $6 million in profit during the first half of 2025.
Business Model and Client Base
Mercor’s revenue model involves providing specialized domain experts—such as scientists, physicians, and legal professionals—to assist AI labs in data labeling and training tasks. The company charges an hourly finder’s fee and matching rate for these services. Its clientele reportedly includes five of the top AI labs, among them Amazon, Google, Meta, Microsoft, and OpenAI, as well as Tesla and Nvidia. A substantial portion of Mercor’s revenue is attributed to a subset of these clients, notably OpenAI.
Expansion into Reinforcement Learning and AI Recruitment
To diversify its offerings, Mercor is developing software infrastructure to support reinforcement learning (RL), a method where AI models improve through feedback on their decisions. The company also plans to launch an AI-powered recruiting marketplace to complement its existing services.
Competitive Landscape and Legal Challenges
Mercor faces competition from firms such as Surge AI—which is reportedly seeking funding at a $25 billion valuation—and other data labeling companies like Turing Labs and Scale AI, which are expanding into RL services. Additionally, OpenAI’s newly introduced hiring platform could potentially evolve into an in-house RL training service, posing a strategic threat.
Mercor is also involved in litigation, with Scale AI suing the startup for alleged trade secret misappropriation. The lawsuit claims a former Scale AI employee who joined Mercor took over 100 confidential documents related to customer strategies and proprietary information.
Leadership and Growth Outlook
Mercor was co-founded in 2023 by Brendan Foody (CEO), Adarsh Hiremath (CTO), and Surya Midha (COO), all Thiel Fellows and Harvard dropouts in their early twenties. To support its next growth phase, the company recently appointed Sundeep Jain, former Uber chief product officer, as its first president.
When contacted, CEO Brendan Foody stated, “We haven’t been trying to raise at all,” and noted that Mercor declines offers regularly. He confirmed the ARR exceeds $450 million but clarified that reported revenue figures include gross customer payments before contractor payouts, a standard accounting practice adopted by competitors Surge AI and Scale AI.
FinOracleAI — Market View
Mercor’s reported financial growth and elevated valuation targets signal strong investor confidence in the AI training services sector, particularly in specialized domain expert sourcing. The company’s profit generation and rapid ARR expansion differentiate it positively from cash-burning peers, supporting a favorable near-term outlook.
However, intensifying competition from well-capitalized rivals and potential disruption from AI labs’ internal platforms present risks. Legal challenges with Scale AI could also introduce operational uncertainties. Market participants should monitor Mercor’s ability to sustain growth, diversify revenue streams, and navigate competitive pressures.
Impact: positive
