Micro1, a young startup that helps AI companies connect with expert human contractors for data labeling and training, has just raised $35 million in Series A funding, pushing its valuation to $500 million. The round was led by O1 Advisors, the VC firm started by former Twitter leaders Dick Costolo and Adam Bain. Bain will also take a seat on Micro1’s board, joining figures like DoNotPay’s Joshua Browder.
This fundraising round comes at a time when the data-labeling industry is in flux. Scale AI, long the giant in this space, faced turbulence earlier this year when Meta poured $14 billion into the company and hired its CEO. The move spooked AI labs like OpenAI and Google, who worried their sensitive projects might be at risk of exposure. While Scale AI has denied sharing client data, many labs began looking elsewhere for partners, opening the door for startups like Micro1 to step in.
Big Ambitions From a 24-Year-Old CEO
At just 24, Micro1’s CEO Ali Ansari has already made waves. Under his leadership, the company has grown from $7 million in annual recurring revenue at the start of 2025 to a striking $50 million just months later. The client list already includes Microsoft and several Fortune 100 companies, not bad for a three-year-old startup still carving out its place against bigger rivals.
Micro1’s growth is impressive, though it’s still smaller than competitors like Mercor ($450M ARR) and Surge ($1.2B in 2024). Still, the traction suggests labs are eager for alternatives that prioritize quality over scale.
From Cheap Labor to Expert Labeling
Unlike Scale AI’s original model of hiring low-cost workers to tag data, Micro1 has taken a different approach. Ansari says the demands of AI labs have shifted: models now need training data from seasoned professionals, engineers, doctors, writers, even professors, to perform better in specialized domains.
To make this happen, Micro1 built Zara, its own AI recruiter. Zara screens, interviews, and vets applicants before they’re matched with projects. The system has already brought in thousands of experts, including talent from Stanford and Harvard, and is set to add hundreds more every week.
Building the Future of AI Training
The industry is also evolving beyond simple data labeling. AI labs are now experimenting with simulated “environments” virtual spaces where AI agents can practice completing tasks. Micro1 is already working on tools in this area, hoping to stay ahead of where the market is heading.
A Growing Market With Room for Many Players
One thing is clear: the demand for high-quality training data is only rising. Since no single provider can meet all the needs of major AI labs, companies like Micro1, Surge, Mercor, and even Scale AI will likely continue to share the market.
With its fresh funding, strong backers, and focus on expert-driven data, Micro1 has quickly become one of the most talked-about challengers in AI infrastructure. And with Ali Ansari at the helm, it looks like the company’s just getting started
