Surge AI, rival of Scale AI, pursues $1B in first capital raise: report

Surge AI, a data-labeling startup similar to Scale AI, hopes to raise $1B in its first capital fundraising round to reach a valuation of more than $15B, according to Reuters.

The San Francisco-based company also plans to capitalize on the growing demand for data labeling in artificial intelligence use cases, the report said.

Scale AI made headlines recently after it received a $14.3B investment from Meta Platforms (NASDAQ:META), giving it a valuation of $29B. A key aspect of the deal included Scale AI CEO Alexandr Wang joining Meta to head its Superintelligence Labs team focused on artificial general intelligence.

However, a side effect of Meta’s massive investment were reports of some of Scale AI’s primary customers, including OpenAI and Google (NASDAQ:GOOG)(NASDAQ:GOOGL), planning to pivot away from the company due to concerns of exposing research to Meta. Scale AI said it is committed to protecting customer data and that its business remains strong, the report said.

Data labeling is considered a crucial step in training AI models. It is the process of adding one or more labels to raw data, such as images, text or videos, to provide context, enabling a model to learn from it.

“For example, labels might indicate whether a photo contains a bird or car, which words were uttered in an audio recording, or if an x-ray contains a tumor,” according to Amazon Web Services (AMZN). “Data labeling is required for a variety of use cases including computer vision, natural language processing, and speech recognition.”

Surge AI was founded in 2020 by Edwin Chen, a former engineer for Meta and Google. Its 2024 revenue topped $1B, compared to Scale AI’s $870M, according to the report. Surge AI’s customers include Google, OpenAI and Anthropic.

“Our mission is to shape AGI with the richness of human intelligence — curious, witty, imaginative, and full of unexpected brilliance,” Surge AI said on its website.