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Scale AI Is Being Investigated by the US Department of Labor

By Charles Rollet

The U.S. Department of Labor (DOL) is investigating the data-labeling startup Scale AI for compliance with the Fair Labor Standards Act, TechCrunch has learned.

That’s a federal law that regulates unpaid wages, misclassification of employees as contractors, and illegal retaliation against workers.

The investigation has been active since at least August 2024, a document seen by TechCrunch shows. And it’s ongoing, according to a person directly familiar with the matter.

The mere existence of an investigation doesn’t mean Scale AI has done anything wrong, and the investigation could find in favor of the company or be dismissed.

Scale AI is based in San Francisco and was valued last year at $13.8 billion. It relies on an army of workers it categorizes as contractors to do essential AI work, like labeling images for Big Tech and other organizations.

Scale AI spokesperson Joe Osborne told TechCrunch that the investigation was initiated during the previous presidential administration and that Scale AI felt that its work building, testing, and evaluating AI was misunderstood by regulators then.

Osborne said that Scale AI has worked extensively with the DOL to explain its business model and that conversations have been productive. More generally, Osborne said that Scale AI brings more “flexible work opportunities in AI” to Americans than any other company and that feedback from its contributors is “overwhelmingly positive.”

More here.

Massive Fundings

PetScreening, an eight-year-old startup based in Mooresville, NC, that helps property managers and landlords manage pet policies, assess pet-related risks, and validate assistance animal requests, raised an $80 million Series B round. Volition Capital and Guidepost Growth Equity were the co-leads. More here.

Shield AI, a ten-year-old San Diego company that builds drones and AI software for military use, raised a $240 million round at a $5.3 billion post-money valuation. Investors included L3Harris and Hanwha Aerospace as well as previous investors Andreessen Horowitz, U.S. Innovative Technology, and Washington Harbour. TechCrunch has more here.

Turing, a seven-year-old Palo Alto startup that collaborates with leading AI labs to enhance advanced model capabilities, including reasoning, coding, and multimodal processing, raised a $111 million Series E round at a $2.2 billion valuation led by Khazanah Nasional Berhad, with Westbridge Capital, Sozo Ventures, Uphonest Capital, AltaIR Capital, Amino Capital, Plug and Play, MVP Ventures, Fortius Ventures, Gaingels, and Mastodon Capital Management also piling on. The company has raised a total of $225 million. TechCrunch has more here.

Big-But-Not-Crazy-Big Fundings

Alpine Eagle, a two-year-old Munich startup that develops airborne systems to detect and intercept hostile drones using advanced sensors and machine learning, raised a $11.1 million seed round. IQ Capital was the lead investor, with participation from HTGF, Expeditions Fund Sentris Capital, and General Catalyst as well as previous investor HCVC. TechCrunch has more here.

Ceramic.ai, a one-year-old San Francisco startup that provides software to help businesses train and fine-tune their own AI models, raised a $12 million seed round. NEA, IBM, Samsung Next, and Earthshot Ventures invested in the deal. TechCrunch has more here.

Crogl, a two-year-old startup based in Albuquerque, NM, that provides an autonomous AI assistant designed to help cybersecurity teams manage and investigate security alerts more efficiently, raised a $25 million Series A round. Menlo Ventures led the transaction. The company has raised a total of $30 million. TechCrunch has more here.

DoubleZero, a startup that is developing a global fiber-optic network designed to enhance blockchain performance by increasing data transmission speeds and reducing delays, closed a $28 million token round at a $400 million valuation. The co-leads were Dragonfly Capital and Multicoin Capital. CoinDesk has more here.

Flex, a three-year-old Miami startup that offers business owners an integrated platform to manage both their business and personal finances, raised a $25 million round and $200 million in debt. The deal was led by Titanium Ventures, with Companyon Ventures, Florida Funders, MS&AD Ventures, AAF Management, and First Look Partners also pitching in. The company has raised a total of $45 million in equity and $300 million in debt. TechCrunch has more here.

Freed, a three-year-old San Francisco startup whose AI-powered assistant helps clinicians by listening to patient visits, transcribing conversations, and generating comprehensive SOAP notes, raised a $30 million Series A round led by Sequoia Capital, with Scale Venture Partners, Daniel Gross, Gokul Rajaram, and Ted Zagat also contributing. CNBC has more here.

Grain, a three-year-old Tel Aviv startup that offers an AI-driven platform to help businesses manage risks associated with currency fluctuations in international transactions, raised a $33 million Series A round led by Bain Capital Ventures, with previous investors Aleph, Vessey Ventures, and Hanaco Ventures also taking part. TechCrunch has more here.

Lumata Health, an eight-year-old startup based in Raleigh, NC, that partners with eye care providers to offer personalized support for patients with chronic eye diseases like glaucoma and diabetic retinopathy, raised a $23 million Series B round. The deal was co-led by LRVHealth, McKesson Ventures, and Cencora Ventures, with previous investor Cortado Ventures also investing. More here.

Nervonik, a five-year-old Los Angeles startup that develops nerve stimulation devices to help relieve chronic pain without drugs, targeting patients with conditions like neuropathy, raised a $13 million Series A round led by USVP, with Foothill Ventures, and Correlation Ventures also joining in. MassDevice has more here.

Renaissance Fusion, a five-year-old startup based in Grenoble, France, that is developing magnetic confinement fusion reactors, raised a $34.5 million Series A-1 round led by Crédit Mutuel Impact, with Lowercarbon Capital also participating. TechCrunch has more here.

Steady Energy, a two-year-old Helsinki startup that designs and operates small nuclear reactors to provide carbon-free heat for district heating and industrial uses, raised a $23.7 million round led by 92 Ventures and including previous investor Lifeline Ventures. ArcticStartup has more here.

Validation Cloud, an eight-year-old Zug startup that provides blockchain infrastructure services, including staking, validator software, and AI-powered data analysis for proof-of-stake networks, raised a $15 million Series A round led by True Global Ventures, with Cadenza, Blockchain Founders Fund, Side Door Ventures, and AP Capital also representing. Fortune has more here.

Zocks, a three-year-old San Francisco startup that provides AI-powered tools for financial advisors to automate meeting prep, take notes, and manage client follow-ups without recording conversations, raised a $13.8 million Series A round led by Motive Ventures, with Expanse Venture Partners, Entrée Capital, and 14Peaks as well as previous investor Lightspeed Venture Partners also stepping up. More here.

Smaller Fundings

AgZen, a five-year-old startup based in Somerville, MA, that monitors pesticide spray coverage in order to help farmers reduce chemical usage, raised a $10 million Series A round led by DCVC Bio, with previous investor Material Impact also chiming in. More here.

Conveo, a one-year-old Antwerp startup that uses AI to conduct and analyze in-depth voice and video interviews with customers in order to provide insights to marketing, insights, product, and design teams, raised a $5.3 million seed round. Investors include Y Combinator, 6 Degrees Capital, Entourage, Pitchdrive, and Syndicate One. Tech Funding News has more here.

Intangible, a San Francisco startup that has developed a 3D creative tool that allows game developers, digital artists, and content creators to design and generate high-quality 3D assets quickly, raised a $4 million seed round. Investors include Andreessen Horowitz, Crosslink Capital, and Karman Ventures. More here.

Outmarket AI, a two-year-old San Francisco startup that provides AI-powered tools that help insurance brokers and carriers analyze data, assess risks, and automate tasks like underwriting and customer management, raised a $4.7 million seed round led by Fika Ventures, with TTV and Dash Fund also opting in. More here.

Tiga AI, a two-year-old startup based in Reston, VA, that is developing an AI-powered tool that helps businesses identify and act on buying signals from potential customers, raised a $2 million round led by Bull City Venture Partners, with Cascade Seed Fund and the Virginia Innovation Partnership also anteing up. More here.

Uniti AI, a one-year-old New York startup that develops AI-powered sales agents designed to help commercial real estate operators automate lead generation and customer interactions, raised a $4 million seed round led by Prudence and including Alate Partners, Flex Capital, Observer Capital, and RE Angels. More here.