Snorkel AI Raises $350M and Achieves a Valuation of $3.5B

The training data specialist raises $350 million in Series E funding for a valuation of $3.5 billion. The company claims $375 million in annualized revenue, eighteen times more year-over-year, driven by its shift towards providing datasets and reinforcement learning environments.

High Gross Volumes but Reduced Net Revenues for Data Labs

Several companies positioned as data labs are reporting significant increases in gross revenue: Mercor reached $2 billion, Handshake surpassed $1 billion earlier this year, and Micro1 hit $500 million according to a source. However, they return about 60% to 70% of this gross revenue to the specialists performing the tasks, resulting in their annualized net revenues remaining well below the gross amounts. Snorkel AI, on the other hand, reports $375 million in annualized revenue, an eighteen-fold increase over twelve months. The company clarifies that since it sells datasets and reinforcement learning environments rather than labor hours, payments to its human experts are recorded as cost of sales and not aggregated into its annualized revenue.

Snorkel Transitions from Labeling Software to Data-as-a-Service Offering

Initially, Snorkel offered software to automate data labeling. Last year, the company pivoted to delivering complete datasets, a service described as data-as-a-service. It relies on a hybrid approach combining its software and models to generate synthetic data, in collaboration with domain experts, and also markets reinforcement learning environments. Launched commercially in 2019 after four years of research led by Alex Ratner and his team at a Stanford AI lab, the company has structured its business around this new offering.

$350M Round Led by Insight Partners and S32

Snorkel AI has closed a $350 million Series E round, bringing its valuation to $3.5 billion. The round was led by Insight Partners and S32, with participation from existing investors, including Addition, Lightspeed, Greylock, GV, and Wells Fargo. The startup, founded seven years ago, has thus seen its value approach triple the $1.3 billion reached during its $100 million Series D round completed 17 months ago.