Hustler Words – Mercor, a startup connecting OpenAI, Meta, and others with AI training experts, is reportedly in talks for a Series C round aiming for a valuation exceeding $10 billion, according to a marketing document viewed by hustlerwords.com and multiple sources. This represents a significant jump from its previously discussed $8 billion target and its $2 billion valuation from its Series B round in February. The company, founded in 2022 by Thiel Fellows and Harvard dropouts, boasts an annualized run-rate revenue approaching $450 million, a figure CEO Brendan Foody claims is even higher, though he clarifies this includes the total amount paid by clients before contractor fees are deducted.
Felicis Ventures, a returning investor, is reportedly considering increasing its investment. The company has reportedly received multiple unsolicited offers valuing it at $10 billion, and has utilized special purpose vehicles (SPVs) to bring in new investors. Mercor’s rapid growth, exceeding even that of Anysphere, which reached a $500 million ARR within a year of launch, is a key factor driving its high valuation. Unlike Anysphere, Mercor reported $6 million in profit during the first half of the year.
Mercor’s revenue model centers on providing specialized domain experts—scientists, doctors, lawyers—for AI model training, charging hourly fees. It claims to serve five top AI labs, including Amazon, Google, Meta, Microsoft, and OpenAI, as well as Tesla and Nvidia, with a significant portion of revenue stemming from OpenAI. To further diversify, Mercor plans to expand into reinforcement learning software infrastructure and an AI-powered recruiting marketplace.
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However, Mercor faces competition from companies like Surge AI (reportedly seeking a $25 billion valuation), Turing Labs, and Scale AI, which is also expanding into reinforcement learning. The recent launch of OpenAI’s hiring platform adds another layer of competitive pressure. Furthermore, Mercor is currently embroiled in a lawsuit with Scale AI over alleged misappropriation of trade secrets.
Despite these challenges and Foody’s downplaying of the fundraising efforts, Mercor’s impressive growth trajectory and ambitious valuation target have sent shockwaves through the AI investment landscape. The company’s future success will depend on its ability to navigate the competitive market, maintain its rapid growth, and successfully execute its diversification strategy.
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