Surge AI Seeks $1B Funding Round to Reach $25B Valuation Amid Meta's Mega Investment in Rival Scale AI.

Surge AI is reportedly seeking a $1B funding round to reach a $25B valuation, according to Bloomberg. The startup is a prominent data-labeling company, and its rival Scale AI received a massive $14.8B investment from Meta Platforms last month. Surge AI aims to capitalize on the growing demand for data-labeling services in the AI industry.

Surge AI, a prominent data-labeling startup, is reportedly seeking a $1B funding round to reach a $25B valuation, according to Bloomberg. This move comes after Scale AI, its rival, received a massive $14.8B investment from Meta Platforms (NASDAQ: META) last month, propelling it to about a $29B valuation [1].

Founded in 2020, Surge AI is in discussions with Andreessen Horowitz, Warburg Pincus, and TPG Inc. to participate in the round, which would be its first [1]. The company has worked with multiple large AI companies, including OpenAI, Anthropic, Meta, and Google (GOOG)(GOOGL), showcasing its pivotal role in the AI ecosystem.

Data labeling involves the tagging of raw data to make it understandable by artificial intelligence models. As the demand for AI continues to grow, so does the need for high-quality, labeled data. Surge AI aims to capitalize on this growing market by providing efficient and scalable data-labeling services.

Meanwhile, Surge AI's pursuit of funding coincides with a significant legal challenge faced by its rival, Meta. Two adult film producers, Strike 3 Holdings and Counterlife Media, have filed a lawsuit against Meta in a California Federal Court, alleging that Meta has been pirating their films to train AI models [2]. The lawsuit, filed on July 23, 2025, alleges that Meta has infringed upon at least 2,396 movies owned by the plaintiffs since 2018. The companies allege that Meta used the BitTorrent protocol to download and distribute their copyrighted content, potentially violating copyright laws.

The case underscores a regulatory vacuum in the use of copyrighted data for AI training. Current copyright laws do not adequately address large-scale data laundering across torrent networks or compel AI developers to disclose their training data. This lawsuit could force the industry to reassess its data acquisition and usage practices, potentially influencing Surge AI's business model and the broader AI industry.

References:
[1] https://seekingalpha.com/news/4474745-surge-ai-seeks-1b-in-funding-round-after-metas-mega-investment-in-rival-report
[2] https://www.medianama.com/2025/07/223-strike-3-lawsuit-against-meta-ai-training-porn/