Micro1, a startup established three years ago that assists AI firms in sourcing and managing human contractors for data labeling and training, has secured a $35 million Series A funding round, which positions the company’s valuation at $500 million. The investment was spearheaded by 01 Advisors, a venture capital firm co-founded by Dick Costolo and Adam Bain, both former executives at Twitter.

This startup is among several firms aiming to bridge the gap in the data market resulting from recent developments involving Scale AI. Following Meta’s $14 billion investment in Scale AI and the hiring of its CEO, AI laboratories, including OpenAI and Google, indicated plans to sever connections with the startup, likely due to apprehensions that their research might reach Meta. (Scale AI refutes the assertion that it discloses sensitive information to Meta as part of its collaboration.)

Nevertheless, AI laboratories still require these data services, and companies like Micro1 are striving to fulfill that demand.

Micro1’s CEO Ali Ansari — who is only 24 years old — informed TechCrunch that his organization has been collaborating with prominent AI laboratories, including Microsoft, as well as various Fortune 100 companies. Ansari mentioned that Micro1 is currently generating $50 million in annual recurring revenue (ARR), a remarkable increase from $7 million at the beginning of 2025.

That is significantly lower compared to larger rivals like Mercor, which generates over $450 million in ARR, and Surge, which reportedly earned $1.2 billion in 2024. However, Micro1’s growth and uptake among AI laboratories appears to be on a positive trajectory.

With this new funding, Micro1 is also appointing Bain to its board of directors, joining Joshua Browder, the founder and CEO of the AI legal assistant DoNotPay.

“The only way models are currently learning is through entirely new human data. Micro1 is integral in providing that data to all frontier labs, operating at speeds I’ve never witnessed before,” Bain remarked in a statement to TechCrunch.

Reuters had previously detailed Micro1’s fundraising endeavors.

All these companies — Micro1, Surge, Mercor, and Scale AI — provide AI labs with access to a broad pool of human contractors who can label and generate data for AI training. This service has become essential for firms like OpenAI, Anthropic, Meta, and Google in developing advanced AI models.

Scale AI was the pioneer in this arena, initially recognizing that it could engage low-skilled contractors worldwide at a relatively low cost to assist with data labeling for AI model training. However, Ansari states that AI labs’ requirements have evolved over the years, as companies now demand high-quality data labeling from domain specialists — including senior software engineers, physicians, and professional writers — to enhance their AI models. The challenge has become attracting these kinds of talent.

This prompted Micro1 to develop its AI recruiter, Zara, which interviews and assesses candidates seeking to join the company as contractors, or as Ansari refers to them, experts. Micro1 claims that Zara has enlisted thousands of experts — including academics from Stanford and Harvard — and that the company intends to onboard hundreds more weekly.

The AI training data market appears to be undergoing another transformation. Currently, many AI labs are keen to engage with startups to create “environments” — virtual workspaces that can be utilized for training AI agents on simulated tasks. Ansari asserts that Micro1 is developing new solutions in the environments sector to address this demand.

Fortunately for startups such as Micro1, AI labs seem to partner with various training data providers. The nature of the industry makes it challenging for any single company to meet all of one AI lab’s data requirements. This indicates that there is ample business available, at least for the present.