Generative AI startup Scale AI raises $1 billion in funding from Nvidia, others; now valued at $14 billion

Generative AI startup Scale AI said on Tuesday it had raised a massive $1 billion in a growth funding round led by venture capital firm Accel, with participation from Amazon, Nvidia, and Meta. The latest round, which valued the company at nearly $14 billion, makes Scale AI a member of the highly coveted unicorn club.

The $1 billion funding surpassed the amount reported about a month ago, which suggested the company was in discussions to raise several hundred million dollars at a valuation close to $13 billion.

Scale AI said it plans to use its fresh capital infusion to enhance data capabilities for its enterprise customers and the U.S. Department of Defense. The company is also set to participate in the White House’s DEFCON 31 red-teaming event.

As top tech companies race to integrate AI into their products and services, startups in the AI chip and machine learning sectors are thriving. Despite a generally sluggish private funding market, AI startups have seen significant investment. In the first quarter alone, they raised $19.15 billion in venture capital, up from $16.36 billion in the same period last year, Reuters reported, citing data from PitchBook data.

With this funding, Accel also maintains a substantial stake in Scale AI, an AI company that has gained prominence for its services catering to entities like OpenAI and various conversational AI startups. Scale AI’s core operation involves labeling images and text to facilitate the training of AI models. Notably, it has recently found success serving clients such as OpenAI.

“The investment would allow Accel to maintain a significant stake in a highly valuable startup that has been instrumental in providing services to industry giants like OpenAI and other players in the conversational AI realm,” The Information reported.

Scale AI finds itself amidst a cohort of artificial intelligence ventures that are rumored to be pursuing substantial funding rounds. For instance, Figure AI Inc., known for its AI-powered humanoid robots, is allegedly seeking a hefty $500 million. Similarly, Anthropic and OpenAI are also expected to pursue funding, with the latter potentially reaching a valuation north of $100 billion.

Headquartered in San Francisco, Scale AI offers a platform for training data essential for AI model development. Its flagship product, the Scale Generative AI Data Engine, enables customers to define their data requirements through a user-friendly interface. A combination of human expertise and automated quality assurance mechanisms ensures the delivery of high-quality data sets.

Moreover, Scale AI’s platform extends beyond data labeling. It includes functionalities for evaluating AI model accuracy, identifying cybersecurity vulnerabilities, and assisting autonomous vehicle developers in refining their training datasets.

Despite a workforce reduction of 20% in January, Scale AI appears to be poised for substantial growth once again. The company cited a changing macro environment but seems to be bouncing back with robust revenue growth, as evidenced by its anticipated $13 billion valuation.

Scale AI and  Figure AI are not alone in cashing in on this AI ride, Cohere, another startup, is also making waves. Founded by former Google researchers, Cohere is reportedly in talks to secure $500 million in funding at a valuation of $5 billion. With a focus on enterprise-grade AI models and strategic partnerships with tech giants like Oracle, Cohere’s rapid valuation increase underscores investor confidence in its trajectory.

Founded in 2016 by CEO Alexandr Wang and Lucy Guo, Scale AI has cemented its reputation as a pivotal player in the AI landscape, focusing on the critical aspect of training data provision for AI applications. Wang’s entrepreneurial journey, which began at the age of 19 while he was a student at MIT, has propelled him to the ranks of the youngest self-made billionaires globally.