Mercor, a San Francisco-based AI training data startup founded in 2023 by three former high school debate teammates, is in early talks to raise a new funding round at a valuation of around $20 billion, more than doubling the $10 billion it reached just nine months ago when it raised a $350 million Series C from Felicis Ventures, Benchmark, and General Catalyst. Bloomberg originally reported the talks on July 9, 2026. According to sources familiar with the subject, Mercor has already received at least one term sheet at the revised value, but the fundraising is still in its early stages, so the conditions might change or the round may not close.
The deal is expected to raise approximately $500 million. If it closes at the reported terms, co-CEOs Brendan Foody and Adarsh Hiremath, along with board chairman Surya Midha who were 20 years old when they founded the company and 22 when Forbes named them the world’s youngest self-made billionaires in October 2025 would each be worth an estimated $4.3 billion.
Mercor’s business model is based on integrating domain specialists (PhDs, attorneys, doctors, engineers, bankers, and programmers) with AI labs that require high-quality specialised data to train and develop frontier models. The company oversees about 30,000 contractors, has vetted over five million candidates using its proprietary AI interviewing platform, and pays its contractor workforce more than $4 million every day. It has been profitable since inception, which is a unique accomplishment in the startup sector. OpenAI, Anthropic, and Google are some of our current and former clients. Meta was also a big client until March 2026, when a security issue forced it to discontinue the agreement indefinitely.
“Mercor grew from $1M to $2B in ARR in 24 months. This is the fastest growth trajectory in history. While everyone knows about AI lab investments in the Task Economy, our fastest-growing segment is Enterprise.”~Brendan Foody
Revenue Doubled in Four Months: From $1 Billion to $2 Billion in Annualised Run Rate
The primary driver of the valuation increase is raw revenue growth, which is tough to ignore. Mercor’s annualized revenue surpassed $1 billion in February 2026. By June 2026, only four months later, the figure had doubled to $2 billion. Brendan Foody, CEO of X, confirmed the milestone publicly. It is worth noting that the $2 billion figure is for gross billings; after contractor payouts, which account for 60-70% of each billed dollar, Mercor’s net revenue is believed to be closer to $600-$800 million.
Still, at a $20 billion valuation, that implies a revenue multiple in line with other high-growth AI infrastructure companies. A key growth driver, according to a source familiar with the matter, is rising demand not just from frontier AI labs but from enterprise and application-layer companies that are building their own models and rely on Mercor for the specialised data to accelerate development — a market segment Foody described as the company’s fastest-growing.
The competitive context is relevant here. Mercor competes most directly with Scale AI, which was valued at $13.8 billion in 2024 and increased to $29 billion after Meta’s minority purchase. Scale AI’s generative AI contributor arm, Outlier AI, raised $200 million in 2024. Mercor’s path from $1 million to $2 billion in annual sales in 24 months is, by most standards, quicker than anything Scale accomplished in a comparable time period.
“Mercor, a startup that helps improve AI models with rich specialised data, is discussing raising new funds at a roughly $20 billion valuation. The company told investors it received at least one term sheet at that valuation. This is less than a year after Mercor raised at a $10 billion valuation.”~Bloomberg Technology
Data Breach, Meta’s Exit, North Korea Infiltration:
The $20 billion valuation discussions come after a genuinely rough stretch in early 2026. In late March, Mercor was caught up in a supply chain attack on LiteLLM, an open-source Python library widely used in AI infrastructure. The breach exposed up to four terabytes of Mercor’s internal data and contractor records. Meta, one of its biggest clients at the time, paused all work with Mercor indefinitely in response. Class action lawsuits filed by contract workers followed.
Forbes also reported that former employees suspected North Korean operatives had infiltrated Mercor’s contractor network using stolen credentials, and that a separate employee had been fired for embezzling funds. Mercor said the impacts to customer and contractor data from the breach were “very limited” based on findings from its own investigation. OpenAI and Anthropic continued working with the company through the period and remain active clients.
“AI training startup Mercor is reportedly in talks to raise a round at a $20 billion valuation — double what it was worth in October. The company announced it crossed $2 billion in annualised revenue and is acquiring Deeptune, a startup that helps train AI agents.”~TechCrunch
Deeptune Acquisition Signals Mercor’s Push Into AI Agent Training:
Alongside the valuation news, Mercor announced the acquisition of Deeptune, a startup that builds simulated software environments where AI agents can practise real enterprise workflows before being deployed. Deeptune has recreated hundreds of real-world applications from spreadsheets to Salesforce specifically for use in reinforcement learning. Andreessen Horowitz led Deeptune’s $43 million Series A in March 2026. The entire Deeptune team is joining Mercor in New York.
The acquisition allows Mercor to expand beyond static data labelling and into the training of AI agents, a fast increasing part of the AI training industry as organizations shift their focus from language model training to autonomous AI systems capable of taking actions in enterprise environments. It is also a bet that agentic applications will drive the next wave of AI training demand, and that Mercor hopes to be prepared well before that wave reaches its top.
“Mercor, the AI data labelling firm founded by the world’s youngest self-made billionaires, is in talks to raise $500 million at a valuation of $20 billion — doubling in under a year. The three founders, now 23, would be worth $4.3 billion each if the round closes.”~Forbes
