Meta’s Unusual Deal to Partially Acquire AI Startup Scale
Meta’s recent deal to acquire 49% ownership of the AI startup Scale is making waves in the tech industry. The deal, which values Scale at over $29 billion, is not your typical acquisition. Instead of buying shares from existing shareholders, Meta is distributing proceeds to shareholders and vested equity holders, providing them with substantial liquidity while allowing them to remain shareholders.
One of the key components of this deal is Meta’s hiring of Scale’s founder and CEO, Alexandr Wang. Wang, who famously dropped out of MIT at age 19 to build Scale, has built the company into a powerhouse in the AI training data industry. Scale’s data is verified by humans, giving it a competitive edge in the market.
While some may see this deal as Meta essentially buying out Scale, sources have clarified that investors are receiving dividends instead. For example, Accel, an early backer of Scale, is expected to receive a payout of $2.5 billion. This significant dividend payout is almost equivalent to acquiring the company outright, raising questions about regulatory approval.
Scale has a strong backing from investors, including tech giants like Amazon and Meta. The company was last valued at $14 billion after a successful Series F funding round. With such a large dividend payout, it remains to be seen whether regulators will approve the deal as it approaches the level of a full acquisition.
