Data-Labeling Firm Surge AI Aims To Raise $1 Billion In Capital

The AI data-labeling company Surge AI aims to raise $1 billion in its first capital-raising round. The startup expects to capitalize on rising demand after Meta invested in Scale AI, its competitor.

According to Reuters, anonymous sources explained that Surge AI hired advisors to negotiate the deal and is targeting a valuation of $15 billion. The discussions are at an early stage, but the company remains optimistic as Scale AI lost customers after Meta’s acquisition, who are now interested in Surge AI—including OpenAI and Google.

Surge AI was founded by Edwin Chen, a former Google and Meta engineer, in 2020. The company generated over $1 billion in revenue last year, surpassing Scale AI which reported $870 million.

After Meta invested $14.3 billion in Scale AI—for a 49% stake in the company and its CEO Alexandr Wang to lead its Superintelligence lab—, the company was valued at around $29 billion.

Now, Surge AI is leveraging recent developments to offer and expand its services to tech giants as companies such as OpenAI and Google express concerns that Scale AI could expose sensitive information to Meta. The startup has quietly positioned itself as one of the most valuable players in the data labelling industry.

SurgeAI has gained a strong reputation in Silicon Valley for its “premium, high-end data labeling services,” as reported by Reuters.

The company has capitalized on reinforcement learning from human feedback (RLHF), a technique used for training advanced AI models. Some investors see the data labeling sector growing and in need, while others hesitate as the need for human labor decreases. The success of the deal would depend on how investors perceive Surge AI’s long-term prospects.

Besides tech companies, Surge AI’s competitor, Scale AI, has also partnered with governments such as Qatar to modernize services with AI tools, and the United States to develop Thunderforge, a military planning and decision-making project.