Micro1, a competitor to Scale AI, raises funds at $500M valuation

Micro1, a three-year-old startup that helps AI companies find and manage human contractors for data labeling and training, has raised a $35 million Series A funding round that values the company at $500 million. The round was led by O1 Advisors, a venture capital firm co-founded by Dick Costolo and Adam Bain, the former CEO and COO of Twitter.

The startup is one of many companies looking to fill the gap in the data market created by recent changes involving Scale AI. After Meta invested $14 billion in Scale AI and hired its CEO, AI labs including OpenAI and Google said they planned to cut ties with the startup, presumably over concerns that their research could end up in Meta’s hands. (Scale AI denies that it shares confidential information with Meta as part of its partnership).

However, AI labs still need these data services, and startups like Micro1 aim to pick up the slack.

Micro1 CEO Ali Ansari — who is just 24 years old — tells TechCrunch that his company has been working with leading AI labs, including Microsoft, as well as several Fortune 100 companies. Ansari said Micro1 is now generating $50 million in annual recurring revenue (ARR), up from $7 million at the start of 2025.

That’s still a far cry from larger competitors like Mercor, which is generating more than $450 million in ARR, and Surge, which reportedly brought in $1.2 billion in 2024. However, Micro1’s growth and adoption among AI labs seems to be growing at a healthy rate.

As part of the new funding, Micro1 is also adding Bain to its board of directors, alongside Joshua Browder, founder and CEO of the AI legal assistant DoNotPay.

“Really the only way models are now learning is through net new human data. Micro1 is at the core of providing that data to all frontier labs, while moving at speeds I’ve never seen before,” Bain said in a statement to TechCrunch.

Reuters previously reported details of Micro1’s fundraising efforts.

All these companies — Micro1, Surge, Mercor, and Scale AI — supply AI labs with access to a large base of human contractors who can label and generate data for AI training. It’s become a crucial service that companies like OpenAI, Anthropic, Meta, and Google need to build cutting edge AI models.

Scale AI was first to dominate this space, with the initial insight that it could pay relatively little for low-skilled contractors around the world to help label data for AI model training. However, Ansari says that the demands of AI labs have shifted in recent years, and that companies now need high-quality data labeling from domain experts — such as senior software engineers, doctors, and professional writers — to improve their AI models. The hard part became recruiting these types of folks.

This led Micro1 to build its AI recruiter, Zara, which interviews and vets candidates who apply to work as one of company’s contractors, or as Ansari calls them, experts. Micro1 says Zara has recruited thousands of experts — including professors from Stanford and Harvard — and that the company plans to add hundreds more every week.

The market for AI training data appears to be changing yet again. Now, many AI labs are interested in working with startups to develop “environments” — virtual workspaces that can be used to train AI agents on simulated tasks. Ansari says Micro1 is building new offerings in the environments space to meet this demand.

Luckily for startups like Micro1, AI labs seem to be working with multiple training data providers. The nature of the business is such that it’s difficult for any one company to handle all of one AI lab’s data needs. That means there’s plenty of business to go around, at least, for now.