Snorkel AI triples valuation to $3.5B as demand for AI training data booms

Snorkel AI, a company that assists in creating training data sets and simulated environments for AI laboratories and corporations, has raised a $350 million Series E round, bringing its valuation to $3.5 billion. This marks nearly triple the $1.3 billion valuation it received when it raised $100 million in a Series D 17 months earlier. Existing investors such as Addition, Lightspeed, Greylock, GV, and Wells Fargo also took part in this round.

Originally, Snorkel AI provided software for data labeling automation. However, it shifted focus last year to offering customers completed data sets, a service known as data-as-a-service. Instead of relying solely on a human expert marketplace, Snorkel utilizes a hybrid approach, combining its software and models with the expertise of subject matter experts to generate data both synthetically and traditionally.

The company's revenue run-rate is now an impressive $375 million, an 18-fold increase over the last year. This surge in revenue is driven by the high demand for AI training data from AI labs. Other data companies that have adopted a similar model, positioning themselves as AI data labs, have also seen comparable growth. For instance, Mercor's gross annualized revenue has reached $2 billion, Handshake has reached the $1 billion milestone, and Micro1 has scaled to $500 million.

It's important to note that these headline gross figures do not reflect the actual net annual revenue, as companies like Snorkel typically pay out around 60% to 70% of their top-line income directly to the human experts performing the work. This cost is included in their cost of goods sold rather than in headline figures. Snorkel was launched commercially in 2019, following four years of research by its co-founder and CEO, Alex Ratner, and his team at a Stanford AI lab.