Micro1, a three-year-old startup that helps AI companies source and manage human contractors for data labeling and training, has raised $35 million in a Series A funding round, reaching a valuation of $500 million.
The round was led by O1 Advisors, the venture capital firm co-founded by former Twitter executives Dick Costolo and Adam Bain. As part of the investment, Bain has joined Micro1’s board of directors.
Market disruption creates opportunity for data providers
The funding comes as major AI labs like OpenAI and Google seek alternative data partners after Meta’s $14 billion investment in competitor Scale AI. The labs expressed concern that their sensitive research data could be shared with Meta, a claim Scale AI denies. This disruption has created an opening for other data service providers to secure contracts with top AI companies.
Micro1’s revenue growth and client base
Micro1 has seen rapid growth over the past year. The company’s annual recurring revenue grew from $7 million at the start of 2025 to $50 million at the time of the funding announcement. CEO Ali Ansari stated that Micro1 works with prominent AI labs, including Microsoft, and serves several Fortune 100 companies.
While its revenue is growing, Micro1 competes with larger, more established players in the data services market. Mercor reports annual recurring revenue of over $450 million, and Surge generated $1.2 billion in revenue in 2024.
Recruiting specialized experts with an AI-powered tool
According to Ansari, the needs of AI labs have shifted, creating a demand for Micro1’s specific approach. The industry is moving away from the previous model of using low-cost global contractors for basic labeling tasks. Instead, labs now require high-quality data from specialized professionals.
- Senior software engineers to label complex code.
- Doctors to accurately tag medical images.
- Professional writers to generate nuanced text data.
To find and vet these professionals, Micro1 developed an AI-powered recruiter named Zara. The tool conducts interviews and assessments to evaluate candidates for contractor roles. Zara has successfully recruited thousands of experts, including professors from Stanford and Harvard, and the company plans to add hundreds more each week.
“Really the only way models are now learning is through net new human data. Micro1 is at the core of providing that data to all frontier labs, while moving at speeds I’ve never seen before.”
Future plans and industry landscape
Micro1 is also expanding its services to include “environments,” which are virtual workspaces used for training AI agents. This new focus is designed to meet the evolving needs of clients as they develop more advanced AI systems.
The business model for AI data providers benefits from the fact that AI labs typically work with multiple vendors to meet their large and varied data requirements. This practice ensures a steady flow of work for companies like Micro1, allowing them to build long-term partnerships with major AI developers.
