Micro1, a three-year-old startup that helps AI companies find and manage human contractors for data labeling and training, has raised a $35 million Series A funding round. This investment values the company at $500 million. The round was led by O1 Advisors, a venture capital firm co-founded by Dick Costolo and Adam Bain, the former CEO and COO of Twitter.
The startup is one of several companies looking to fill a gap in the data market created by recent changes involving Scale AI. After Meta invested in Scale AI and hired its CEO, other AI labs including OpenAI and Google stated they planned to cut ties with the startup. This move was presumably over concerns that their research could end up in Meta’s hands. Scale AI denies that it shares confidential information with Meta as part of its partnership. However, AI labs still require these data services, creating an opportunity for startups like Micro1 to pick up the slack.
Micro1 CEO Ali Ansari, who is just 24 years old, reports that his company has been working with leading AI labs, including Microsoft, as well as several Fortune 100 companies. Ansari said Micro1 is now generating $50 million in annual recurring revenue, a significant increase from the $7 million it reported at the start of 2025.
That revenue is still considerably less than that of larger competitors. Mercor is generating more than $450 million in annual recurring revenue, and Surge reportedly brought in $1.2 billion in 2024. Despite this, Micro1’s growth and its adoption among AI labs appears to be increasing at a healthy rate.
As part of the new funding, Micro1 is adding Adam Bain to its board of directors, alongside Joshua Browder, the founder and CEO of the AI legal assistant DoNotPay. In a statement, Bain said that the primary way models are now learning is through new human data, and that Micro1 is at the core of providing that data to all frontier labs while moving at an unprecedented speed.
Reuters had previously reported details of Micro1’s fundraising efforts.
All these companies, including Micro1, Surge, Mercor, and Scale AI, supply AI labs with access to a large base of human contractors who can label and generate data for AI training. This has become a crucial service that companies like OpenAI, Anthropic, Meta, and Google need to build cutting-edge AI models.
Scale AI was the first to dominate this space with the insight that it could pay relatively little for low-skilled contractors around the world to help label data. However, according to CEO Ali Ansari, the demands of AI labs have shifted. Companies now need high-quality data labeling from domain experts such as senior software engineers, doctors, and professional writers to improve their AI models. The challenge became recruiting these types of professionals.
This led Micro1 to build its AI recruiter, named Zara, which interviews and vets candidates who apply to work as contractors, whom the company calls experts. Micro1 states that Zara has recruited thousands of experts, including professors from Stanford and Harvard, and that the company plans to add hundreds more every week.
The market for AI training data appears to be changing once again. Now, many AI labs are interested in working with startups to develop environments, which are virtual workspaces used to train AI agents on simulated tasks. Ansari says Micro1 is building new offerings in the environments space to meet this growing demand.
Fortunately for startups like Micro1, AI labs seem to be working with multiple training data providers. The nature of the business makes it difficult for any single company to handle all of one AI lab’s data needs. This means there is plenty of business to go around, at least for the time being.