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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鈥檚 most highly valued and capitalized venture-backed companies, the top ranked are all founded or headquartered in California.

In recent quarters, the state鈥檚 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 附近上门 data.

That鈥檚 a cyclical high, and well above anything we鈥檝e seen in recent years, as charted below.

What鈥檚 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鈥檚 tempting to characterize California鈥檚 strong showing as an AI thing. After all, the largest funding rounds of late are for generative AI pioneers, with San Francisco-based alone hauling in $40 billion in a single round in March 2025.

In fact, California鈥檚 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 附近上门 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鈥檝e 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鈥檚 not a coincidence it鈥檚 the capital for artificial intelligence as well.

Rather, California has a combination that鈥檚 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.

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