Data-labeling company Scale AI confirmed on Friday that it has received a “significant” investment from Meta that values the startup at $29 billion. The startup also said its co-founder and CEO Alexandr Wang is stepping down from his role to join Meta and help the bigger company with its AI work.
Reports indicate that Meta invested about $14.3 billion for a 49% stake in the startup, which produces and labels data that’s used to train the large language models that underpin a significant portion of generative AI development.
Meta confirmed the investment. “Meta has finalized our strategic partnership and investment in Scale AI. As part of this, we will deepen the work we do together producing data for AI models and Alexandr Wang will join Meta to work on our superintelligence efforts. We will share more about this effort and the great people joining this team in the coming weeks,” a spokesperson for Meta told TechCrunch.
Jason Droege, Scale’s current chief strategy officer, will hop in as interim CEO. Scale AI noted that Meta’s investment will be used to pay investors and shareholders, as well as to fuel growth. The company emphasized that it remains an independent entity. Wang will continue at the data-labeling firm as a director on its board.
As my colleague Max Zeff wrote on Wednesday, this investment is a way for Meta to improve its AI efforts as its rivals Google, OpenAI and Anthropic rush ahead, and the social media company’s own AI model releases trail the competition. Plus, according to data by SingalFire, the company lost 4.3% of its top talent to other AI labs last year.
For the last several years, leading AI labs such as OpenAI have relied on Scale AI to produce and label data that’s used to train models. In recent months, Scale AI and its data annotation competitors have started hiring highly skilled people, such as PhD scientists and senior software engineers, to generate high-quality data for frontier AI labs.
Just last year, Scale AI raised $1 billion last year from investors including Amazon and Meta at a valuation of $13.8 billion.