AI Recruiting Startup Mercor Raises $100M at $2B Valuation

Mercor Secures $100 Million in Series B Funding

Mercor, an AI-powered recruiting startup established by three 21-year-old Thiel Fellows, has successfully completed a $100 million Series B funding round. This information was directly confirmed to TechCrunch by the company.

Felicis, based in Menlo Park, spearheaded the investment, resulting in a company valuation of $2 billion. This represents an eightfold increase over Mercor’s prior valuation, as previously detailed by The Wall Street Journal.

Existing investors, including Benchmark and General Catalyst, alongside DST Global and Menlo Ventures, also participated in this funding round.

General Catalyst previously led Mercor’s $3.6 million seed round in 2023. Benchmark subsequently provided backing for the $32 million Series A round in 2024, which valued the company at $250 million.

Young Founders Lead a Rapidly Growing Startup

This funding round positions CEO Brendan Foody, CTO Adarsh Hiremath, and COO Surya Midha as some of the youngest founders to lead a billion-dollar startup.

The platform, which has garnered support from prominent figures like Peter Thiel, Jack Dorsey, and Adam D’Angelo, aims to enhance its capacity to connect individuals with fulfilling career opportunities. It intends to maximize the potential of human talent through its innovative approach.

Established in 2023, Mercor leverages artificial intelligence to optimize the recruitment process. Its system automates tasks such as resume screening and candidate matching.

Furthermore, the platform offers AI-driven interviews and payroll administration. Employers simply submit job descriptions, and Mercor’s system identifies the most suitable candidates.

AI-Driven Hiring and Bias Reduction

Mercor asserts that its automated system streamlines hiring procedures and mitigates potential biases. The company suggests that AI systems are inherently less prone to bias than human recruiters.

However, the claim that AI systems are entirely unbiased remains a subject of debate. Despite this, companies like OpenAI are already utilizing Mercor’s automated tools, believing they can identify superior candidates compared to traditional methods.

Candidates undergo a 20-minute AI interview designed to assess their skills and generate a comprehensive profile. This profile is then used to match them with relevant positions, including full-time, part-time, and hourly roles.

“We gather performance data from candidates and utilize it to refine our predictive models, identifying those most likely to succeed in the future,” explained Foody.

Expanding Talent Pool and Revenue Growth

Initially, Mercor concentrated on recruiting software engineers and technology professionals specializing in areas like operations, content creation, product development, and design. Software engineers continue to be the most sought-after talent on the platform.

However, AI laboratories are increasingly seeking professionals from diverse backgrounds, including consultants, PhDs, bankers, doctors, and lawyers.

To accommodate this growing demand, Mercor has broadened its talent pool, assisting HR teams in evaluating over 468,000 applicants. India currently serves as its largest talent source, followed by the U.S.

Europe and South America are experiencing significant growth in talent acquisition through the platform.

The company’s revenue has experienced substantial growth, driven by the increasing adoption of flexible work arrangements by companies. Mercor generates revenue by charging hourly finders’ fees to its clients.

In September, the startup reported a 50% month-over-month growth rate, with an annual revenue run rate in the “tens of millions.” This has now increased to a $75 million ARR, with the majority of revenue originating from AI laboratories.

Mercor currently collaborates with five of the world’s leading AI labs, including OpenAI.

The $2 billion valuation translates to a 27x ARR multiple, which is considered reasonable in comparison to the inflated valuations observed in the current market. Some investors are willing to pay up to 50 times ARR for rapidly expanding generative AI companies.

Addressing Concerns and Future Outlook

Concerns regarding potential hiring bias and the possibility of job displacement due to AI advancements are being addressed.

Foody contends that Mercor is not displacing workers but rather automating repetitive tasks, thereby increasing the value of human contributions in areas requiring specialized skills.

According to the CEO, Mercor identifies roles that are best suited for human expertise in an AI-driven economy, or tasks that AI is currently unable to perform. These include training AI models, making complex decisions, and fulfilling creative or strategic functions.

“If AI automates 90% of the economy, humans become the critical factor for the remaining 10%,” Foody stated. “This creates a tenfold increase in the value of human economic output.”

He further explained that this shift will lead to a more flexible, gig-based work model.

The founder believes Mercor will maintain its relevance as companies increasingly prioritize expertise over experience and opt for specialists for short-term projects rather than relying solely on full-time employees.

“I believe work will become more efficient through improved job matching,” he said. “The best person for the job should handle each project, not simply the person who is currently available.”

Mercor, with an average team age of 22, has recently recruited the former head of Human Data Operations at OpenAI and the previous head of Growth at Scale, demonstrating its commitment to attracting top talent.