Surge AI seeks to raise up to $1 billion capital to capitalize growing demand

Data-labeling firm, Surge AI that competes with Scale AI, has hired advisors to raise as much as $1 billion in the first capital raising in the firm's history. The company reportedly seeks to capitalize on growing user demand amid Scale AI's recent customer exodus.

The company, founded by former Google and Meta engineer Edwin Chen, is targeting a valuation of over $15 billion, according to a source.

The talks are still in early stages and the final number could be higher. The funding would be a mix of primary and secondary capital that provides liquidity for the employees.

Surge AI, which has been profitable and bootstrapped by Chen, has raked in over $1 billion in revenue last year, bigger than its better-known competitor Scale AI, which reported $870 million in revenue over the same period of time.

Scale AI, in comparison was valued at $14 billion in a funding round last year, and was mostly recently valued at nearly $29 billion when Meta invested for a 49% stake in the company and poached its CEO Alexandr Wang to be its chief AI officer to lead its new Superintelligence Labs.

Like other Scale AI competitors, Surge AI is benefiting from Scale AI's customer losses following Meta's investment. This includes OpenAI and Scale's largest customer, Google, who are now planning to move away from the platform over concerns that doing business with Scale could expose their research priorities to Meta. Scale has said its business remains strong, and it is committed to protecting customer data.