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Mercor Eyes $10 Billion Valuation in Upcoming Series C Funding Round

Mercor, a pioneering startup facilitating connections between companies like OpenAI and Meta with domain professionals for AI model training, is reportedly in talks with investors for a Series C funding round, according to sources familiar with the negotiations and a marketing document obtained by TechCrunch.

Felicis Considers Increasing Investment

Felicis, a previous investor, is contemplating a deeper investment for the Series C round. However, Felicis has chosen not to comment on the matter.

Targeting a $10 Billion Valuation

Mercor is eyeing a valuation exceeding $10 billion, up from an earlier target of $8 billion discussed just months prior. Final deal terms may still fluctuate as negotiations progress.

A Surge of Preemptive Offers

Potential investors have been informed that Mercor has received multiple offer letters, with valuations reaching as high as $10 billion, as previously covered by The Information.

New Investors on Board

Reports indicate that Mercor has successfully onboarded at least two new investors to assist in raising funds for the impending deal via special purpose vehicles (SPVs).

Previous Funding Success

The company’s last funding round occurred in February, securing $100 million in Series B financing at a valuation of $2 billion, led by Felicis.

Impressive Revenue Growth

Founded in 2022, Mercor is nearing an annualized run-rate revenue (ARR) of $450 million. Earlier this year, the company reported revenues soaring to $75 million, later confirmed by CEO Brendan Foody to reach $100 million in March.

Projected Growth Outpacing Competitors

Mercor is on track to surpass the $500 million ARR milestone quicker than Anysphere, which achieved this goal approximately a year post-launch. Notably, Mercor has already generated $6 million in profit during the first half of the year, contrasting with its competitors.

Revenue Model and Clientele

Mercor’s revenue stream is primarily generated by connecting businesses with specialized experts in various domains—such as scientists and lawyers—charging for their training and consultation services. The startup claims to supply data labeling contractors for leading AI innovators including Amazon, Google, Meta, Microsoft, OpenAI, Tesla, and Nvidia, with notable income derived from collaborations with OpenAI.

Diversifying with Software Infrastructure

To expand its operational model, Mercor is exploring the implementation of software infrastructure for reinforcement learning (RL), a training approach that enhances decision-making processes in AI models. The company also aims to develop an AI-driven recruiting marketplace.

Facing Competitive Challenges

Mercor’s journey isn’t without competition; firms like Surge AI are also seeking funding to bolster their valuation significantly. Additionally, OpenAI’s newly launched hiring platform poses potential competitive pressures in the realm of human-expert-powered RL training services.

Co-Founder Insights

In response to inquiries, CEO Brendan Foody stated, “We haven’t been trying to raise at all,” and noted that the company regularly declines funding offers. He confirmed that the ARR is indeed above $450 million, clarifying that reported revenues encompass total customer payments before contractor distributions, a common accounting practice in the industry.

Leadership and Growth Strategy

Mercor was co-founded in 2023 by Thiel Fellows and Harvard dropouts Brendan Foody (CEO), Adarsh Hiremath (CTO), and Surya Midha (COO), all in their early twenties. To help drive the company forward, they recently appointed Sundeep Jain, a former chief product officer at Uber, as the first president.

Legal Challenges from Scale AI

Mercor is currently facing a lawsuit from rival Scale AI, which accuses the startup of misappropriating trade secrets through a former employee who allegedly took over 100 confidential documents related to Scale’s customer strategies and proprietary information.

Maxwell Zeff contributed reporting

Sure! Here are five frequently asked questions (FAQs) based on the topic of Mercor’s valuation and financial performance:

FAQs

1. What is Mercor’s current valuation?

Mercor is targeting a valuation of over $10 billion as it continues to grow in the AI training startup sector.

2. What is Mercor’s current revenue run rate?

The company has a revenue run rate of approximately $450 million, indicating strong financial performance and growth potential.

3. What does a $10 billion valuation mean for Mercor?

A $10 billion valuation suggests that investors believe in Mercor’s potential for significant future growth and its strong position in the AI training market.

4. How does Mercor plan to achieve its ambitious valuation?

Mercor is focusing on scaling its AI training solutions, attracting top talent, and potentially expanding its market reach to enhance its product offerings and customer base.

5. What factors contribute to the high valuation in the AI startup sector?

High valuations in the AI sector typically result from rapid advancements in technology, increasing demand for AI solutions across various industries, and investor confidence in the profitability of such innovations.

If you have more specific inquiries or need further information, feel free to ask!

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A New Era in AI: Maisa AI Addresses the 95% Failure Rate of Generative AI Pilots

A staggering 95% of generative AI pilots at companies are failing, according to a recent report published by MIT’s NANDA initiative. However, forward-thinking organizations are not giving up. Instead, they are exploring agentic AI systems capable of learning and being efficiently supervised.

Introducing Maisa AI: Pioneering Accountable AI Solutions

This is where Maisa AI steps in. The innovative startup has built its foundation on the belief that enterprise automation needs accountable AI agents rather than obscure black boxes. With a recent $25 million seed funding round led by European VC firm Creandum, Maisa has unveiled Maisa Studio—a model-agnostic self-service platform that enables users to train digital workers using natural language.

A Unique Approach to AI-Driven Processes

While the concept might seem akin to vibe coding platforms like Cursor and Lovable, Maisa emphasizes a fundamentally different methodology. “Instead of using AI to generate responses, we leverage AI to construct the processes required to achieve those responses—what we call ‘chain-of-work,’” says CEO David Villalón.

The Visionary Team Behind Maisa AI

Leading this innovative approach is co-founder and Chief Scientific Officer Manuel Romero, a former colleague of Villalón at the Spanish AI startup Clibrain. They recognized the limitations of AI in 2024, expressing the need for a solution that mitigated hallucinations, understanding that “you cannot solely rely on AI,” as Villalón articulated.

HALP: Human-Augmented LLM Processing

Maisa introduces HALP, or Human-Augmented LLM Processing, a unique system that encourages user interaction while digital workers delineate their operational steps. This approach resembles students solving problems at a blackboard, making the process more collaborative.

Maisa AI - Worker builder — **Image Credits:** Maisa AI

Building Trust with the Knowledge Processing Unit

Maisa also developed the Knowledge Processing Unit (KPU), a deterministic mechanism designed to curb hallucinations. Initially focused on solving technical challenges rather than specific use cases, Maisa soon discovered that its emphasis on reliability resonated with organizations eager to apply AI responsibly—ranging from a prominent bank to firms in the automotive and energy sectors.

Revolutionizing Robotic Process Automation

By catering to enterprise clients, Maisa aims to redefine robotic process automation (RPA), facilitating productivity boosts without the need for rigid, predefined protocols or extensive manual coding. The startup offers deployment in both secure cloud and on-premises environments to meet diverse organizational needs.

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Strategizing for Future Growth in the AI Landscape

Despite its enterprise-first orientation resulting in a smaller customer base compared to the millions flocking to freemium vibe-coding platforms, Maisa aims to capture market share as these competitors pivot to enterprise appeal. The launch of Maisa Studio is designed to expand its customer funnel and facilitate adoption.

Global Expansion Plans and Industry Partnerships

Maisa plans to scale with existing clients with operations across various countries. With headquarters in Valencia and San Francisco, Maisa is set to strengthen its foothold in the U.S.; its $5 million pre-seed funding last December was led by San Francisco venture firms NFX and Village Global.

Attracting Investment for Regulated Sectors

TechCrunch has learned that U.S. firm Forgepoint Capital International participated in this latest funding round through its European venture with Banco Santander, emphasizing Maisa’s appeal within regulated industries.

Maisa’s Unique Position in the Competitive AI Marketplace

Focusing on intricate use cases that demand accountability from non-technical users could set Maisa apart from competitors like CrewAI and various other AI-driven workflow automation tools. In a recent LinkedIn post, Villalón underscored the pitfalls of the “AI framework gold rush,” warning that shortcuts can lead to long-term complications when reliability, auditability, and corrective measures are needed.

Doubling Staff to Meet Demand and Deliver Results

With ambitions of expanding its team from 35 to 65 by the first quarter of 2026, Maisa is poised for rapid growth. Starting in late 2025, the startup expects to serve its waiting list and prove that it can deliver on its promises. “We are going to show the market that there is a company that is delivering what has been promised, and that it’s working,” Villalón asserts.

Here are five FAQs with answers related to the funding and mission of Maisa AI:

FAQ 1: What is Maisa AI, and what problem is it aiming to solve?

Answer: Maisa AI is a technology company focusing on improving enterprise AI solutions. The company aims to address the high failure rate of 95% in enterprise AI implementations by providing more effective and reliable tools and frameworks for businesses.

FAQ 2: How much funding did Maisa AI secure, and what will it be used for?

Answer: Maisa AI has secured $25 million in funding. This capital will be utilized to enhance their technology, scale their operations, and develop more robust AI solutions to help enterprises deploy AI successfully and efficiently.

FAQ 3: Why is the failure rate for enterprise AI so high?

Answer: The high failure rate in enterprise AI often stems from various factors, including a lack of understanding of AI technology, insufficient data quality, inadequate integration with existing systems, and unrealistic expectations regarding outcomes. Maisa AI aims to streamline these processes to improve overall success.

FAQ 4: What makes Maisa AI different from other AI companies?

Answer: Maisa AI distinguishes itself by focusing specifically on the enterprise sector’s unique challenges. Their solutions are tailored to provide actionable insights, improve data handling, and facilitate smoother implementation processes compared to generic AI offerings.

FAQ 5: What industries can benefit from Maisa AI’s solutions?

Answer: Maisa AI’s solutions can benefit a wide range of industries, including finance, healthcare, manufacturing, retail, and logistics. Any sector looking to leverage AI for improved efficiency, analytics, and decision-making can find value in Maisa’s offerings.