Mercor, a startup connecting domain experts to technology giants like OpenAI, Meta (NASDAQ:META), and Tesla (NASDAQ:TSLA), is in discussions with investors for a Series C round that could value the company at more than $10 billion, according to TechCrunch.
The potential raise comes less than two years after the company's founding and follows a $100 million Series B announced in February at a $2 billion valuation led by Felicis.
Sources familiar with the matter told TechCrunch that Felicis is considering increasing its investment, while other venture capital firms have reached out with preemptive offers valuing the startup around $10 billion. The company has also added at least two new investors through special purpose vehicles.
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Mercor's Revenue Surge and Early Profitability
Mercor was co-founded by Brendan Foody, Adarsh Hiremath, and Surya Midha, all Thiel Fellows and Harvard dropouts still in their early twenties, according to TechCrunch.
The company reported an annualized run-rate revenue of $450 million, up significantly from the $75 million figure it shared with TechCrunch in February. In March, Mercor CEO Foody posted on X that annual recurring revenue had reached $100 million.
According to a source cited by TechCrunch, the company has told investors it expects to surpass $500 million in annual recurring revenue faster than Anysphere, the startup behind AI coding assistant Cursor.
Unlike many competitors, Mercor has already reported profitability, generating $6 million in profit during the first half of the year, Forbes reported. The company earns revenue by supplying scientists, doctors, and lawyers to AI labs for model training and takes an hourly matching fee for their services.
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Mercor claims to provide contractors to Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, GOOGL)), Meta, Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and OpenAI, with an outsized share of revenue coming from OpenAI, TechCrunch reported.
Foody told TechCrunch, "We haven't been trying to raise at all. We turn down offers every month." He added that the company's revenue includes the full amount customers pay before contractor payouts, which he said is consistent with practices used by rivals Surge AI and Scale AI.
Competition and Leadership Moves
Mercor faces competition from companies like Surge AI, which is reportedly targeting a $25 billion valuation, and Scale AI, which is also expanding into reinforcement learning services, TechCrunch reported. OpenAI's own hiring platform may also evolve into a direct rival.
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To strengthen its leadership team, Mercor appointed Sundeep Jain, a former chief product officer at Uber (NYSE:UBER), as its first president, Forbes reported.
Jain told Forbes that his top priority will be scaling Mercor's systems, which he described as everything from onboarding and management processes to improved tools for tracking and reporting data for customers.
He acknowledged that joining a team led by founders in their twenties brings a different dynamic, adding with a laugh, "I'm significantly increasing the average age."
Mercor's rapid growth and young founding team have made it a focus of investor interest as the AI sector races ahead. With clients that include many of the world's most powerful technology firms, the startup's pursuit of a $10 billion valuation highlights the growing demand for human expertise in AI model training.
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