The insatiable appetite for specialized AI training data among leading labs and major corporations is fueling explosive growth for a wave of data-labeling startups. Micro1, a four-year-old company, stands out among these fast-risers, having expanded its gross annual run rate from $100 million to $500 million in just the last eight months, according to a source familiar with the business. Like its competitors, which hire domain experts—such as doctors, lawyers, and scientists—on a contract basis, Micro1 retains roughly 60% to 70% of that revenue. This puts its net annual run rate between $150 million and $200 million.

While Micro1 still trails rivals like Mercor (which hit $2 billion in gross annualized revenue this summer) and Handshake (which reached $1 billion earlier this year), its revenue trajectory underscores a key point: there is ample demand to sustain multiple players in the AI training data space. This growth is poised to accelerate, with some researchers predicting that future AI spending on data could eventually rival spending on compute. That outlook is promising for Micro1, which is seeing its contract sizes grow at an accelerating clip and anticipates expanding margins over time.

The startup is also increasingly producing synthetic data without human involvement, such as automated descriptions of video content. However, the practice of selling the same datasets to multiple clients has drawn recent criticism. Detractors argue that distributing off-the-shelf data to Chinese AI developers helps elevate their models to match the capabilities of top U.S. systems. Micro1’s founder, Ali Ansari, pushed back last month on X, stating that unlike some competitors, his company does not sell data to Chinese model makers. “Some human data companies work with foreign adversaries. And the results show today in Kimi K3,” Ansari posted. “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 initially launched as an AI recruiting startup. But after noticing that data-labeling clients were using his AI platform to vet and recruit engineers for annotation work, Ansari decided to pivot and enter the data-labeling business as well. Micro1 did not respond to a request for comment.