The insatiable demand for unique AI training data from top labs and corporations is fueling rapid growth among data-labeling startups, and Micro1 is one of the fastest risers. The four-year-old company has expanded its gross annual run rate from $100 million to $500 million over the past eight months, according to a person familiar with the matter. Micro1 keeps roughly 60% to 70% of that figure as net revenue, putting its net annual run rate between $150 million and $200 million. While it still trails competitors like Mercor, which hit $2 billion in gross annualized revenue this summer, and Handshake, which reached $1 billion earlier this year, Micro1‘s growth suggests the market can support multiple large players in AI training data.

The boom is expected to continue, with some researchers hypothesizing that future AI spending on data could rival spending on compute. Micro1 is seeing its contract sizes grow at an accelerated pace and expects margins to expand over time. The startup is increasingly generating synthetic data without human involvement, such as automated descriptions of video content. Some of this data can be sold to multiple customers, driving gross margins for “off-the-shelf” data as high as 80% to 90%, according to a source familiar with the startup’s finances.

Selling the same datasets to multiple clients has attracted recent controversy, with critics arguing that distributing off-the-shelf data to Chinese AI developers helps their models match top U.S. models. Micro1‘s founder, Ali Ansari, said last month on X that unlike some competitors, the startup does not sell data to Chinese model makers. He wrote: “Some human data companies work with foreign adversaries. [A]nd the results show today in Kimi K3. We believe it’s shameful to claim American AI dominance desires while selling millions worth of data to countries that we are in adversarial competition with.”

Like Mercor, Micro1 began as an AI recruiting startup. After noticing that data-labeling clients were using his AI platform to vet and recruit engineers for annotation, Ansari pivoted to enter the data-labeling business itself. Ansari previously told TechCrunch that in addition to having experts evaluate model outputs (a concept known as reinforcement learning gyms), the company is building a robotics pre-training dataset by having hundreds of generalists record everyday object interactions in their homes.

Micro1 raised its Series A at a $500 million valuation last September, and TechCrunch understands the startup may have recently raised another round at a significantly higher valuation. Micro1 did not respond to a request for comment.