Demand for high-quality AI training data is driving rapid growth in data labeling startups. Micro1, founded four years ago, saw its annualized revenue rise from $100 million to $500 million over eight months, with an estimated annual net income of $150 million to $200 million. Though its current size lags that of competitors Mercor and Handshake, whose revenues are $2 billion and $1 billion annually respectively, the company is expanding synthetic data production (including auto-generated video descriptions) to boost margins to 80% to 90%. It plans to avoid selling data to Chinese AI developers. Originally an AI recruitment firm, it now offers model evaluation services and is building a robot pre-training dataset using user interactions. Micro1 completed its Series A funding round in September 2025 at a $500 million valuation and may pursue another round soon with a potentially higher valuation.