Mercor, the fast-growing startup that connects big tech companies with domain experts to train and refine AI models, is back in the spotlight. The company is reportedly in talks with investors for a Series C funding round, with insiders suggesting its valuation target could hit $10 billion.
According to people familiar with the talks, Mercor already has multiple offers on the table. Venture firms, including longtime backer Felicis, are considering doubling down on the company. While the exact terms are still being finalised, several sources say that valuations of $10 billion or more are being floated, a big jump from the $8 billion discussed just months ago.
Mercor has scaled at a pace few startups achieve. Founded in 2022, the company is already approaching $450 million in annual recurring revenue (ARR), a sharp rise from the $100 million it reported earlier this year. What makes this growth stand out is profitability: unlike many AI startups still burning cash, Mercor generated $6 million in profit in the first half of the year.
How Mercor Makes Money
The startup’s business model is simple but powerful. It connects companies like OpenAI, Meta, Google, Microsoft, Tesla, and Nvidia with domain experts, scientists, doctors, lawyers, and other professionals who help train AI models. Mercor charges a matching fee and an hourly rate for these placements. Sources say a significant portion of its revenue comes from its work with OpenAI.
Mercor isn’t stopping at providing contractors. The company is expanding its presence in AI infrastructure with reinforcement learning tools, which enable models to improve through feedback. It also plans to build an AI-powered recruiting marketplace, a move that could disrupt the talent-matching space.
Despite its rapid rise, Mercor faces competition from rivals like Surge AI, which is also raising funds at sky-high valuations, and Scale AI, which has already expanded into reinforcement learning. In fact, Scale AI has taken Mercor to court, accusing it of misusing confidential customer information. Mercor denies wrongdoing.
