Bay Area companies got 70% of all U.S. venture capital in the past year. Southern California got another 4%.
One reason California’s economy succeeds despite the numerous hurdles it puts in front of industry is that it’s the king of venture capital, the nectar of big-scale business breakthroughs.
Investors offered young U.S. companies a total of $589 billion in much-needed seed money in the year ended in June, according to my trusty spreadsheet’sDuring those 12 months, Bay Area-based companies got $411 billion of these investments, primarily to fund the battle for artificial intelligence supremacy. That’s 70% of all VC funding, which spurs immediate business activity that could produce the next corporate giant or two.
Meanwhile, Southern California got $21 billion, or 4% of all venture capital investments. That may seem small, but only New York City got more: $45 billion, or 8%. Boston was No. 4 at $20 billion, or 3%. This cash inflow seems to be a ringing endorsement from smart investors taking rather large risks: California ain’t perfect, but if you want to change the business world, it’s the place to be.
California has averaged 3.7% growth in this broad measure of business output over the last 20 years. That’s the seventh-fastest jump among the states and well above the nation’s 2.1% expansion pace. The “information” industry, an economic niche dominated by tech-savvy folks who attract all that venture capital, accounted for 30% of California’s GDP growth since 2006. Nationally, information was only 16% of U.S. GDP growth.
The information industry was more important to growth in just two other states: Connecticut, with a 45% share of its meek 0.8% historic annual expansion pace, and Washington state, with 35% of its 3.7% growth – second-fastest among the states. , information was tied to 36% of the Golden State’s business output. Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at
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