The AI training data market is in full swing as Micro1, a three-year-old startup, just closed a $35 million Series A at a $500 million valuation. The timing isn't coincidence - major AI labs are scrambling for alternatives after cutting ties with Scale AI following Meta's $14 billion investment, creating a massive opportunity for nimble competitors.
The AI training data wars just got a major new player. Micro1 has closed a $35 million Series A that values the three-year-old startup at $500 million, positioning itself as a premium alternative in a market shaken by Scale AI's recent upheaval.
The round, led by O1 Advisors - the venture firm co-founded by former Twitter executives Dick Costolo and Adam Bain - comes at a pivotal moment. After Meta invested $14 billion in Scale AI and effectively acquired its CEO, major AI labs including OpenAI and Google announced they were cutting ties with the data provider. The concern? Their proprietary research could end up in Meta's hands, despite Scale AI's denials about data sharing.
That created a massive opening, and startups like Micro1 are rushing to fill it. The company's 24-year-old CEO Ali Ansari tells TechCrunch his startup now generates $50 million in annual recurring revenue, up from just $7 million at the start of 2025. The client list includes Microsoft and several Fortune 100 companies.
But Micro1 isn't just riding the Scale AI exodus wave - it's betting on a fundamental shift in how AI models learn. While Scale AI built its empire on low-cost global contractors doing basic data labeling, Ansari argues the industry now needs premium talent: senior software engineers, doctors, and professional writers who can create the high-quality training data that frontier models demand.
"Really the only way models are now learning is through net new human data," Adam Bain, who's joining Micro1's board, said in a statement. "Micro1 is at the core of providing that data to all frontier labs, while moving at speeds I've never seen before."
To recruit these domain experts, Micro1 built Zara, an AI-powered recruiter that interviews and vets candidates. The system has reportedly recruited thousands of experts, including professors from Stanford and Harvard, with plans to add hundreds more weekly. It's a stark departure from Scale AI's volume-based approach.
