In the startup game, betting against California has long been a losing proposition.
The three most valuable American public companies all began as Golden State startups. And among the current lineup of today’s most highly valued and capitalized venture-backed companies, the top ranked are all founded or headquartered in California.
In recent quarters, the state’s dominance in startup funding has grown even more pronounced. Last year, California companies pulled in 63% of all U.S. startup funding at seed through growth stage, per Crunchbase data.
That’s a cyclical high, and well above anything we’ve seen in recent years, as charted below.
What’s more, California is now so far ahead of any other state that even the notion of a race for first sounds ridiculous. The runner-up, New York, secured just 11% of startup funding last year, followed by Massachusetts with a measly 5%, and Texas with just 4%.
In short: We may love the narrative of new tech hubs arising to displace current leaders, but for now it looks closer to the realm of sci-fi than nonfiction.
All about the moonshots
It’s tempting to characterize California’s strong showing as an AI thing. After all, the largest funding rounds of late are for generative AI pioneers, with San Francisco-based OpenAI alone hauling in $40 billion in a single round in March 2025.
In fact, California’s edge in AI funding is even greater than its lead across industries. Last year, companies headquartered in the state pulled in 80% of seed through growth funding for companies in Crunchbase AI categories. It was the highest share since we began following the space.
Meanwhile, the list of largest California funding recipients last year is also overwhelmingly AI-dominated, as you can see below.
Yes, but
However, we’ve seen this plotline before. Across decades, Golden State startups have been on the leading edge of virtually every tech moonshot that later turned viable, from microchips to the backbone of the modern internet to the era of scalable apps and social networking. It’s not a coincidence it’s the capital for artificial intelligence as well.
Rather, California has a combination that’s so far proven impossible to top. Most obvious are deep talent pools tied to regional tech giants, labs and universities coexisting alongside an enormous supply of investment capital. Perhaps equally hard to replicate is a startup culture that accepts an uncomfortably high failure and burn rate in the pursuit of world-changing innovations.
California has plenty of critics, whose complaints largely converge on the notion that its leading cities are too expensive and that taxes are too high. However, no one is making the case that those obstacles have significantly impeded its track record to date.
Related Crunchbase query:
Illustration: Dom Guzman
Stay up to date with recent funding rounds, acquisitions, and more with the
Crunchbase Daily.
