Micro1, a Competitor to Scale AI, Raises Funds at $500M Valuation

Micro1, a three-year-old startup that connects AI companies with human contractors for data labeling and training, has closed a $35 million Series A round, giving it a valuation of $500 million. The investment was led by 01 Advisors, the VC firm co-founded by former Twitter executives Dick Costolo and Adam Bain.

The company is stepping into the gap left by Scale AI, which recently saw several AI labs — including OpenAI and Google — announce plans to cut ties after Meta invested $14 billion in the startup and hired its CEO. While Scale AI has denied sharing confidential research with Meta, the shift has created new opportunities for rivals like Micro1.

Micro1’s 24-year-old CEO Ali Ansari told TechCrunch that the company is already working with top AI labs such as Microsoft along with a number of Fortune 100 companies. Micro1 has grown its annual recurring revenue (ARR) to $50 million, up from $7 million at the beginning of 2025.

That’s still small compared to competitors: Mercor is generating over $450 million ARR, while Surge brought in $1.2 billion in 2024. Still, Micro1’s rapid adoption shows strong momentum. As part of the funding deal, Adam Bain will join the board of directors, alongside Joshua Browder, CEO of 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.

Reports of Micro1’s fundraising first surfaced in Reuters.

Like Scale AI, Mercor, and Surge, Micro1 supplies AI labs with global networks of contractors who label and generate data for training AI models. This service remains critical for companies such as OpenAI, Anthropic, Meta, and Google.

Scale AI pioneered this business model by hiring low-cost contractors worldwide for large-scale labeling. But Ansari notes that AI labs now demand high-quality, domain-specific expertise — from senior engineers, medical professionals, and academic writers — to advance their models. Recruiting this kind of talent has become the core challenge.

To solve this, Micro1 developed Zara, an AI recruiter that screens and interviews candidates. Zara has already vetted thousands of experts, including professors from Stanford and Harvard, and the company plans to onboard hundreds more weekly.

The market is evolving further as AI labs begin exploring virtual environments — simulated workspaces that train AI agents on tasks beyond raw data labeling. Ansari says Micro1 is actively building offerings in this area to meet growing demand.

Fortunately for Micro1, the business landscape favors multiple providers. AI labs often diversify their contracts, making it unlikely for any single company to dominate all data needs. For now, that means there is still plenty of business to go around.