“Data is the new oil.” The analogy is apt because data is the resource that powers the most transformative AI models, and like crude oil, data must be processed and refined to be useful. This largely human-led process, known as data labeling, was already a $2.2b industry in 2022 and is poised to grow by orders of magnitude in the coming years.
However, with the rapid and continuing advance of AI, labeling demand is outpacing supply. Many customers can't get the data they need because labeling companies lack skilled labor for specialized services. Others are priced out. This high-growth, supply-constrained industry seems ripe for innovation — and we think crypto is a wedge in.
We’re excited to announce that we’ve led the seed round for Sapien to expand its decentralized data labeling network.
Introducing Sapien
The driving thesis behind Sapien is that crypto can be leveraged to build a bigger labeling network faster while maintaining high data quality. The team is building a protocol for organizing and compensating human labelers (or “AI workers”) worldwide — including part-time individuals, skilled workers, and even small businesses — more efficiently than a centralized company. Here are the ways we believe crypto gives Sapien a needed edge in the category:
Global Network: Data labeling is a global industry where large companies, primarily based in the Bay Area, often set up facilities in Asia, recruit local workers, and then sell labeled data to customers all over the globe — leading to friction when moving between different banking, legal, and labor systems. An internet-native protocol is the most seamless platform for these different parties to interact on. Sapien can easily tap into any new geography for customers or labelers, including skilled workers across the globe for niche and specialized tasks.
Optimized Cost Structure: Sapien will use crypto rails and stablecoins to handle all payments, and lean on the protocol for coordination versus human management where possible. These innovations allow it to automate away some of the operational bloat that strains the industry today, lowering costs.
Token incentives: Many new labeling networks struggle with initial growth, but as a tokenized marketplace, Sapien can leverage tokens to incentivize supply on a greater scale. Sapien can also utilize rewards and its onchain reputation systems to design better incentives for improving the accuracy of labeled data — they’ve reported 99% accuracy rates to date. Finally, distributing network value and ownership should incentivize more skilled workers to join by giving them potential upside in the network’s growth.
With these innovations, we believe that Sapien can grow faster than its competitors while offering better pricing. The model is experimental, but if executed correctly, it could revolutionize the industry.
Despite being a young startup, Sapien is already making strides and growing rapidly. Its early customers include some of the largest enterprises in the world, such as Alibaba, Baidu, and TAL, along with reputable AI research organizations such as Midjourney. Its network includes participants across 70 countries, achieved through securing partnerships with massive organizations like World and Yield Guild Games. The network has tagged 2m+ data points, and active labeler numbers just crossed 10k, growing 50% month over month.
Sapien’s progress speaks to the strength of its team — a lean, elite group of industry veterans. They’re led by CEO Rowan Stone, a founding team member of Base who helped launch the L2, and Trevor Koverko, a seasoned Ethereum community member since 2017 and founder of Polymath, one of the largest RWA protocols of its time. They are joined by others who come with experience leading business development at Kraken, bringing the Flow blockchain to market, and building traditional AI businesses — in our view, the ideal mix of crypto-native GTM and enterprise backgrounds for this category.
We are excited to support Sapien on this journey to revolutionize data labeling.
Disclaimer: This post is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by Variant. While taken from sources believed to be reliable, Variant has not independently verified such information. Variant makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This post reflects the current opinions of the authors and is not made on behalf of Variant or its Clients and does not necessarily reflect the opinions of Variant, its General Partners, its affiliates, advisors or individuals associated with Variant. The opinions reflected herein are subject to change without being updated.
