Scale AI accelerates the development of AI applications by helping machine learning teams generate high-quality ground truth data.
Official website: https://scale.com/
Headquarter: San Francisco, USA
- Total funding: $602 million
- Last funding round: $325 million
- Last round valuation: $7.3 billion
- Last round date: April 2021
- Lead investors: Y Combinator, Tiger Global, Spark Capital, Index Ventures, Accel, Durable Capital, Wellington Management, Greenoaks Capital.
Scale AI: Investment opportunity
The startup specializes in data labeling, which helps companies like Toyota, General Motors, U.S. Airforce Department, PayPal, Square, Samsung, Lyft, Pinterest, and Airbnb to focus on product development, rather than labelling and identifying data. For autonomous vehicles, Toyota uses Scale product, which helped to improve Toyota’s annotation throughput by 10X in a matter of weeks.
Scale has also developed a platform — Nucleus, which helps companies manage their data and makes recommendations for improving data quality before submitting it to Scale for labelling. The platform also have ready-made solutions in the field of autonomous cars, drones, content and language, document processing, retail and e-commerce, robotics and government.
According to the CEO forecast, the company could reach $100 million in revenues this year.
The company enlarged its workforce from 100 up to 300 for the last 12 months
For the last year, Scale had two funding rounds and doubled its valuation since December 2020.
Scale AI plans to use attracted capital for further development of existing products, and for possible enlargement into other industries like healthcare.
The global market for artificial intelligence was estimated at $62.35 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 40.2% from 2021 to 2028. At this rate, the market will be valued at nearly a trillion US dollars by 2028.
Due to the large market size and promising technology, venture capital is also showing great interest in this area. According to PitchBook, there have been 442 deals worth of $11.65 billion in financing for artificial intelligence companies in the United States since the beginning of 2021.
Scale AI is the largest artificial intelligence startup in the United States. The main competitors are Hive and Labelbox.
While Hive only deals with data labelling, Labelbox, like Scale AI, has developed a data management platform for its clients, which is very rare in the industry.
Scale has the most capital for labeling high-quality data, which gives the advantage of reaching the largest customers in the niche.
Financial performance of Scale AI
- For the last 12 months, the company was able to double its sales of major products and Nucleus platform.
- Since 2018 revenues have increased from $4 million, up to $40 million in 2019. The current year Scale AI is planing to achieve revenues of $100 million, according to CEO.
- Scale AI valuation has appreciated by more than 7 times since July 2019, which makes the annualized growth of 300%.
Founders and management of Scale AI
- Alexander Wang – 24-year-old CEO. Dropped from MIT and founded the startup at the age of 19.
- Michael Kratsios is the new head of strategy and previously served as the US CTO in the Trump administration.
- Jeff Wilke, former CEO of Amazon Worldwide Consumer, joined the company as an advisor to CEO.
- Brad Porter, former vice president of Amazon’s robotics division, became the first CTO at Scale.
- Russell Kaplan, the former Senior Machine Learning Engineer at Tesla, now is the Head of Product Nucleus.
Most likely scenario (80%):
- Based on recent hires of top-management — the company will become public through SPAC or IPO in 2-3 years.
Less likely scenario (20%):
- Acquisition by one of tech gints, who showing activity in AI related startups M&A: Google, Microsoft, Apple
Data processing and storage legislation can complicate the development of artificial intelligence technology in various fields, where the company is operating.
As the leader of the data labeling market, the company is at risk of losing its lead amid growing competition from smaller startups.
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