Handshake’s Strategic Acquisition of Cleanlab Enhances AI Data Labeling Capabilities
In a significant move within the artificial intelligence (AI) industry, Handshake, a prominent AI data-labeling startup, has acquired Cleanlab, a company specializing in data label auditing. This acquisition aims to bolster Handshake’s commitment to delivering high-quality data for AI model training by integrating Cleanlab’s advanced data auditing technologies and expertise.
Background on Handshake and Cleanlab
Founded in 2013, Handshake initially emerged as a platform dedicated to connecting college graduates with potential employers. Recognizing the growing demand for accurate data labeling in AI, the company expanded its services approximately a year ago to include human data-labeling solutions tailored for foundational AI model companies. This strategic pivot positioned Handshake as a key player in the AI data-labeling sector.
Cleanlab, established in 2021, has carved a niche in the AI industry by developing software solutions that enhance the quality of data produced by human labelers. The company’s innovative algorithms are designed to identify and flag incorrect data without necessitating a second human review, thereby streamlining the data validation process and ensuring higher accuracy in labeled datasets.
Details of the Acquisition
The acquisition primarily focuses on talent acquisition, commonly referred to as an acqui-hire. Nine pivotal Cleanlab employees, including the company’s co-founders—Curtis Northcutt, Jonas Mueller, and Anish Athalye—are set to join Handshake’s research division. All three co-founders hold PhDs in computer science from the Massachusetts Institute of Technology (MIT), bringing a wealth of knowledge and experience to Handshake’s team. The financial specifics of the transaction have not been disclosed.
Prior to the acquisition, Cleanlab had successfully raised $30 million in funding from notable investors such as Menlo Ventures, TQ Ventures, Bain Capital Ventures, and Databricks Ventures. At its peak, the startup employed over 30 individuals, reflecting its rapid growth and the industry’s recognition of its contributions.
Strategic Implications and Industry Context
The integration of Cleanlab’s team and technologies is poised to significantly enhance the quality of data that Handshake provides to AI laboratories. Sahil Bhaiwala, Handshake’s Chief Strategy and Innovation Officer, emphasized the importance of this development, stating, We have an in-house research team that thinks a lot about where our models are weak, what data should we be producing? How high quality is that data? The Cleanlab team has been focusing on this problem for years.
This acquisition also underscores the competitive dynamics within the AI data-labeling industry. Cleanlab had attracted acquisition interest from several other companies in the sector. However, the decision to merge with Handshake was influenced by the fact that many of these competitors, including Mercor, Surge, and Scale AI, frequently utilize Handshake’s platform to source human experts such as doctors, lawyers, and scientists for their data-labeling projects. Cleanlab’s CEO, Curtis Northcutt, highlighted this strategic alignment by noting, If you’re going to pick one, you should probably pick the source, not the middleman.
Handshake’s Market Position and Future Outlook
As of 2022, Handshake was valued at $3.3 billion, reflecting its substantial growth and influence in the market. The company projected an annualized revenue run rate (ARR) of $300 million by the end of 2025, with expectations to reach high hundreds of millions in ARR in the current year. Handshake’s client portfolio includes eight leading AI laboratories, notably OpenAI, indicating its pivotal role in the AI ecosystem.
The acquisition of Cleanlab is anticipated to further solidify Handshake’s position as a leader in the AI data-labeling industry. By integrating Cleanlab’s advanced data auditing capabilities, Handshake aims to set new standards for data quality, thereby enhancing the performance and reliability of AI models trained using its datasets.
Industry Trends and Competitive Landscape
The AI data-labeling industry has witnessed significant developments in recent years. For instance, in July 2025, Scale AI, a major player in the sector, laid off 14% of its staff, amounting to approximately 200 employees, and severed ties with 500 global contractors. This restructuring followed Meta’s substantial $14.3 billion investment in Scale AI, which led to the departure of several top executives to join Meta’s AI initiatives. These events highlight the rapidly evolving nature of the industry and the strategic maneuvers companies are undertaking to maintain a competitive edge.
Moreover, the demand for high-quality labeled data has spurred investments in startups offering innovative solutions. In May 2022, Heartex, an open-source platform for data labeling, secured $25 million in a Series A funding round led by Redpoint Ventures. Similarly, in January 2022, AIMMO, a Korean startup specializing in AI data annotation, raised $12 million in a Series A round to advance its data labeling technology and expand globally.
Conclusion
Handshake’s acquisition of Cleanlab represents a strategic effort to enhance the quality and efficiency of AI data labeling. By integrating Cleanlab’s expertise and technologies, Handshake is well-positioned to meet the growing demand for accurate and reliable data in AI model training. This move not only strengthens Handshake’s market position but also reflects broader industry trends where companies are investing in advanced solutions to address the complexities of data labeling in the AI era.
