Billionaire exodus? California drew 10 times more venture capital than any other state this year
Palmer Luckey, founder of Anduril Industries, talks at Anduril's headquarters in Costa Mesa in 2025. (Bloomberg )
Nilesh Christopher
4 min read
Despite concerns that California's costs and regulations are bad for business, the state has attracted an unprecedented pile of capital this year, and no other state is even close.
The Golden State's deep pool of talent, rich investors and other tech infrastructure have made it ground zero for the artificial intelligence explosion. That has helped it attract more than $335 billion in venture capital funding this year, according to PitchBook's private market funding data released Thursday.
Its next biggest competitor, New York, raised less than a tenth of California's total. Texas raised 1/40th of the amount.
"California has far and away the most [deals], obviously, a huge amount of that sits in the [San Francisco] Bay Area," said Kyle Stanford, director of U.S. venture capital research at PitchBook. "Los Angeles, San Diego has a really strong tech market that I think benefits a lot from capital moving easily between San Francisco and L.A."
Although a campaign for a new tax on billionaires has convinced some ultra-rich residents to shift to other states and businesses often complain that high property and energy costs and an anti-business regulatory regime make it too tough to make money in the state, the inability of the top talent, companies and investors in AI to set up elsewhere shows California's enduring attraction.
The state's economy grew 5% last year to a record $4.25 trillion, making it larger than every country other than the U.S., China and Germany. It is home to nearly 400 billion-dollar startups — more than any other state, according to CB Insights.
Southern California has emerged as a go-to address for fast-growing space and defense tech companies.
"California's workers, entrepreneurs, and innovators continue to prove that investing in California delivers real results," Gov. Gavin Newsom said in a statement last week in response to strong productivity numbers for the state. "As one of the largest economies in the world, the Golden State demonstrates that a strong workforce, economic growth, innovation, and performance go hand in hand."
In the three months that ended in June, 1,087 California companies raised $108.8 billion in venture capital. Just three companies — Anthropic, Jeff Bezos' Project Prometheus and Anduril Industries — absorbed 75% of that total. Anthropic alone raised $65 billion, which valued it at nearly $1 trillion.
Among metropolitan regions, Los Angeles ranked behind only Silicon Valley and New York, which attracted $98 billion and $11.5 billion in venture investment, respectively.
"Capital is flowing back into American innovation with real force," said Bobby Franklin, president of the National Venture Capital Assn., an industry group that put out the report with PitchBook. "Investment activity is picking up, fundraising is improving, and there are early signs the IPO market is beginning to reopen."
Investors poured in nearly $8 billion across 207 deals in the Los Angeles, Long Beach, and Santa Ana metro areas, up 28% from a year earlier, according to PitchBook.
The top deals in the region were led by aerospace and defense companies Anduril Industries, which raised $5 billion, and Impulse Space, which attracted $500 million.
Companies in industrial parts, software, consulting and life sciences were the other sectors in the Southland that attracted venture investments. El Segundo-based industrial supplies company Advanced Manufacturing Company of America and Huntington Beach-based aerospace company Mach Industries each raised $300 million.
To be sure, the surge in the size and number of monster deals could be overshadowing other money-raising efforts from smaller companies and investment by smaller funds, industry experts said.
Nearly 90% of invested dollars went to AI firms, up from last year, when around 65% of new funds were allocated to AI.
"If you're a tech company and you're not an AI company, you have a very, very difficult opportunity ahead of you to raise capital," Stanford said.
This concentration of capital in AI leaves smaller, middle-of-the-road venture funds without large AI holdings struggling to return capital to their investors.
Only the largest funds, such as Andreessen Horowitz and Sequoia Capital — which possess the war chest to back OpenAI, Anthropic, and SpaceX — stand to gain from their initial public offerings of stock.
"It's going to concentrate the fundraising over the next few years as well into these already very large names," Stanford said.
Beyond the two potential blockbuster listings — Anthropic and OpenAI, each valued around $1 trillion — the IPO pipeline is thin.
"We don't really have a strong IPO market," Stanford said. "Obviously, SpaceX's IPO is great. OpenAI and Anthropic, if they go out this year, will be very large drivers of distribution. But a vast majority of investors do not have exposure to them, and so that money will not make it back to them."
Whether California's venture-investing boom can continue at this record-breaking pace now hinges on how the IPOs of Anthropic and OpenAI perform.
"If Anthropic and OpenAI have really strong financials, that's a big push of support for the rest of the market," Stanford said.
Generative AI investors continue to battle in the top 10
Jacob Robbins
1 min read
The more things change, the more they stay the same.
For the fourth year in a row, Sequoia Capital retains the top spot as the most active investor in AI. But as mega-deals and mega-IPOs define the next stage of AI's dominance over the venture ecosystem, intensifying investor jockeying has upended PitchBook's rankings.
And the competition is showing no signs of slowing down. According to PitchBook's latest AI VC Trends report, Q1 funding for the vertical has already eclipsed 2025's full-year total, reaching $255.5 billion. Driven by historic fundraising by companies like OpenAI and Anthropic, only three deals accounted for 67% of the vertical's total funding.
This is an updated list of the 10 most active VC investors in generative AI since 2019, according to PitchBook data.
Methodology: Lists of the most active investors are based on a tally of relevant deal types as defined by PitchBook. These deal types align with existing PitchBook report methodologies, which can be found here. This list is limited to VC investors and excludes angel groups, accelerators, incubators and growth investors, among other investor types.
We've talked before about the hot IPO summer, but with SpaceX just launched to public markets and Anthropic and (maybe) OpenAI soon to come, it can be easy to miss the sheer scale of what's happening.
We got a good reminder of it in Wednesday's NCVA-Pitchbook Venture Monitor report. Not surprisingly, all of the money in private markets is flooding into AI — but one particular figure stood out. Taking the measure of the pending OpenAI and Anthropic IPOs, the report drops this nugget: "Along with the SpaceX IPO, these exits will generate more value than all U.S. VC-backed exits since 2000."
That's quite a claim, and when you add up the numbers, it's hard to disagree. SpaceX has already gone public at a $1.77 trillion valuation, and with both Anthropic and OpenAI pushing into the trillions it's likely the trio together will land somewhere north of $4 trillion. By comparison, the U.S. Securities and Exchange Commission counted just $70 billion in U.S.-based IPO proceeds last year.
Careful readers will notice a few caveats in the language. It doesn't include non-U.S. companies like Alibaba, and we're measuring "value created" as opposed to strictly liquid cash. A lot of the major tech developments happened at companies that had already gone public (the iPhone, the debut of Android, and the launches of YouTube and Instagram), so they wouldn't be captured in the IPO figures.
Still… that was a pretty eventful 25 years. Among other things, that period saw IPOs from Google (2004), Tesla (2010), and Meta (2012), which are now among the most valuable companies in the world. During the same period, LinkedIn, Slack, and WhatsApp were all acquired for more than $20 billion. Uber's $84 billion IPO seemed like a lot of money in 2019, but it's less than 5% of what SpaceX just drummed up.
One factor here is that companies are staying private for longer. The Google of today probably would have delayed its IPO and gone public at a higher number. Another factor is the capital-intensive nature of AI training, which has pushed labs into intense fundraising and inflated valuations. But the sheer scale of the public offerings is still way beyond anything the industry has ever done, and is already pushing the financial infrastructure to its limit.
The AI IPO boom could reshape San Francisco overnight
The AI IPO boom could reshape San Francisco overnight ·Quartz·Spencer Platt/Getty Images
Jackie Snow
4 min read
A version of this article originally appeared in Quartz's members-only Weekend Brief newsletter. Quartz members get access to exclusive newsletters and more. Sign up here.
San Francisco has lived through gold rushes before. This one is could be the biggest yet.
SpaceX went public earlier this month, minting roughly 4,400 new millionaires. Many of them work near the company's Hawthorne, California headquarters, not in San Francisco. But OpenAI and Anthropic, both headquartered in the city, are expected to follow later this year or early next.
If they do, that new millionaire count rises to roughly 12,000, about 800 of whom will hold more than $100 million in assets, according to an analysis from Hill.com, a platform that tracks private market transactions.
That kind of wealth concentration in a single city over a matter of months, does not disappear quietly into savings accounts or a few flashy cars. It moves through housing markets, courtrooms, tax filings, and industries you might not expect.
Here is what is already changing, and what is about to, in the City by the Bay and beyond.
The housing market is already losing its mind
San Francisco real estate has already gone feral. Median home prices are up nearly 15% year over year for the three months ending in May, the fastest growth in the country, according to Redfin.
Homes are selling for a million dollars or more over asking price, if not double. At the very top of the market, there is not enough mansions to go around, with far more buyers shopping for eight-figure homes than properties available to buy. A growing share of deals are happening off-market entirely, before listings ever go public.
And even with the Anthropic and OpenAI IPOs not yet on the calendar, at least one seller reportedly said he would accept shares of either as payment.
The divorce lawyers are already circling…
After Google went public in 2004, divorce lawyers reported a surge in filings. Same for after Cisco in 1990. Sudden wealth, research has found, gives unhappy couples the financial footing to act on what they have been postponing. One Palo Alto divorce attorney who tracked both of those waves told the Financial Times ahead of the Facebook IPO that he expected the same pattern to follow (though it does not appear anyone ever followed up to find out if he was right).
The same windfall that ends marriages can also start them. California's community property laws make IPO timing consequential for both. Assets acquired between marriage and separation are typically split down the middle, which means the moment a company goes public can determine how much wealth is actually on the table.
Lawyers who specialize in this territory say delaying a filing until after a major liquidity event is a common strategic move for both sides. The logic works in reverse, too. Mark Zuckerberg, apparently mindful of California's community property laws, married Priscilla Chan the day after the Facebook IPO.
…And so are the escorts
A handful of women now market themselves as companions for Silicon Valley's most tech-obsessed clients, charging between $3,500 and $6,000 an hour, multiples of what the high end of traditional escort platforms charge. Some are booked out for months and considering raising their rates again.
The same industry racing to build AI companionship is, paradoxically, starving its own workers of the real thing, one escort told Forbes. They post about GPUs, AI safety, and the latest in longevity research on social media between bookings. At least one runs a booking portal built like a text-based role-playing game. Their clients, many of whom work directly in AI, are often less interested in sex than in time with someone who takes their obsessions seriously and can talk to them about it.
The 'third wave' of American philanthropy
After making a fortune, many want to cement their legacy through charitable giving. Anthropic's seven founders stand to make billions and have pledged to donate at least 80% of their wealth. The nonprofit that holds a 26% equity stake in OpenAI is expected to have assets valued at around $180 billion after the IPO, more than twice the size of the Gates Foundation's endowment, and has said it plans to distribute at least $1 billion over the next year. Tens of billions more could come from the thousands of employees who find themselves flushed and wanting to give back.
But where it goes is an open and contested question. Much will likely flow toward AI safety research and effective altruism-aligned causes, given the ideological makeup of the founders doing the giving. That has already generated skepticism.
As the New York Times pointed out, the OpenAI Foundation lists as one of its two causes managing the future and safety of AI, the same technology from which its wealth derives. Whether that counts as generosity or as another way to boost the same power that created the wealth in the first place depends on who you ask.
America's leading AI labs are set to spend the second half of this year preparing for initial public offerings that will vault them into instant megacap status. Anthropic, valued at $965 billion in May, is slated to debut as early as October, and OpenAI, valued at $852 billion in March, is likely to follow in 2027.
As listings loom, questions about the nature of the companies' token-payment business model are getting louder. Palantir CEO Alex Karp blasted the model last week, telling CNBC that "something has gone completely wrong." Enterprise customers have begun to question the burdensome cost of pay-per-use token consumption and look to cheaper, less sophisticated open-weight models. So can the world's two great AI labs keep up the pace?
The aggressive adoption of agentic AI in some workplaces this year led to the creation of the slang term tokenmaxxing. That's what happens when engineers, under pressure to demonstrate they are integrating the new technology but with no clear guidelines, use AI models to excess. Executives have quickly realized this isn't the most efficient way of doing business. As a result, companies including Uber, Microsoft, Salesforce and Meta have taken steps to ration their employees' use of advanced AI because the token payment structure preferred by Anthropic and OpenAI has proven more expensive than it's worth.
Speaking to TBPN, Palantir's Karp said the excessive use of AI without regard for whether it creates value is "kind of like a porn addiction." During his CNBC appearance, he said the US AI industry should not dismiss the potential for cheaper open-weight models, especially those in development in China, to close the gap:
Beijing startup Z.ai's GLM-5.2 model is now ranked among the top 10 large language models by Artificial Analysis, and is ranked as the second-best model for web development by AI evaluation platform Code Arena, placing it alongside Anthropic, OpenAI and Google. The open-weight model is also four to six times cheaper than frontier AI.
Some US and international enterprise customers have already reportedswitching to cheaper Chinese models like DeepSeek and cutting back on payments to OpenAI and Anthropic.
Raising the Stakes: The Financial Timesreported last week that OpenAI has held talks with the Trump administration about giving the US government a 5% stake. But the paper said its proposal hinges on other US AI labs, like Anthropic, agreeing to do the same. Experts, meanwhile, warn that recent export controls on advanced US AI models may accelerate the international adoption of models developed by Chinese firms. Two respected Silicon Valley financiers who have the president's ear understand this: Former Trump advisor David Sacks and current Trump advisor Marc Andreessen have both noted GLM-5.2's power in recent weeks.
This post first appeared on The Daily Upside. To receive razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
OpenAI Offers US Government a $42 Billion Slice of Itself: Report
OpenAI Offers US Government a $42 Billion Slice of Itself: Report ·decrypt
Jose Antonio Lanz
3 min read
OpenAI has been in talks with the Donald Trump administration about handing the U.S. government a 5% stake in the company, the Financial Times reported, citing two people familiar with the discussions. At OpenAI's $852 billion valuation from its March funding round, that slice is worth roughly $42.6 billion.
OpenAI CEO Sam Altman's pitch frames this as democratizing AI's economic upside—the best way to ensure Americans share in the industry's growth. He raised the idea directly with President Trump, Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent, according to the FT.
The proposed structure would model a sovereign wealth vehicle like the Alaska Permanent Fund, a state-owned fund established in 1976 to invest surplus oil revenues and pay annual dividends to state residents.
The proposal doesn't stop at OpenAI. Altman reportedly wants other major U.S. AI developers—Anthropic, Google, Meta—to cede a similar 5% to the government through the same vehicle. None of those companies have signaled any interest in joining as of yet.
OpenAI launched GPT-5.6 in limited form just days earlier, after the White House's Office of the National Cyber Director asked for a restricted rollout while officials develop a testing framework for frontier AI. That was the second government intervention of the month—Anthropic spent most of June in lockdown on Mythos 5 and Fable 5 while under emergency export controls, after the Defense Department previously labeled the company a "supply chain risk," before access was restored this week.
OpenAI has been more supportive than Anthropic when it comes to its deals with the U.S. government, signing partnerships where Anthropic refused.
Equity has become the administration's preferred tool for managing tech relationships. The government took a 9.9% stake in Intel last August, paying $8.9 billion by converting CHIPS Act grants into shares at $20.47 each—a position now worth well over $50 billion. AMD and Nvidia agreed to hand over 15% of their China chip revenues in exchange for export licenses. Trump said in May he should have negotiated a larger stake in Intel.
The FT characterized the discussions as conceptual and early-stage, adding that any arrangement could require Congressional approval.
The deal, if it materializes, would mark the first time Washington holds equity in a private AI company. For OpenAI—navigating a confidential IPO filing and a probe from a coalition of 42 state attorneys general—the deal may be worth it.
Senator Bernie Sanders, who met with Altman in recent weeks, is pushing a bill that would require the largest AI companies to surrender 50% of their equity to a public fund, with proceeds flowing to Americans as direct payments. Both OpenAI and Anthropic have filed confidentially for IPOs, meaning that any potential government stake agreed now would precede the ownership dilution that comes with a public float.
OpenAI CEO Sam Altman and company executives reportedly suggested that major U.S. AI firms set aside 5% of their equity for a government vehicle, according to the Financial Times.
Donald Trump's second term has been marked by greater government involvement in businesses; The U.S. acquired a 10% stake in Intel last year.
Recent reports said OpenAI is pushing its IPO to next year.
OpenAI has discussed giving the U.S. government a 5% stake, the Financial Times reported on Thursday, a crucial development that comes amid the growing scrutiny of AI for national security risks and major firms heading for public listings.
Under the proposal, OpenAI has suggested that other U.S. AI companies also hand the government similar stakes, the report said, adding it was unclear whether the other companies would agree.
Last month, President Donald Trump said his administration was considering ways to give the public an ownership stake in leading AI companies, addressing concerns that ordinary Americans may not benefit from the industry's expected profits.
Similar calls have been made by lawmakers in South Korea, where chipmaker SK Hynix and Samsung are minting profits and fueling the stock market.
OpenAI Suggests All AI Companies Hand Over 5% Stake
According to the FT, OpenAI CEO Sam Altman and company executives suggested that major U.S. AI firms set aside 5% of their equity for a vehicle similar to the Alaska Permanent Fund, a state-backed fund financed by oil revenues that pays annual dividends to Alaskans.
Altman discussed the stake sale with Trump, Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent and Democratic Senator Bernie Sanders, the FT report said.
Trump's direct involvement with businesses has been one of the standouts of his second term. Last year, the U.S. government picked up a 10% stake in Intel and Trump has routinely argued that his involvement helped Intel's stock surge multifold and revive its foundry business.
He is also known to have been involved in the months leading up to Paramount clinching the Warner Bros. deal from Netflix.
The stake talks come close amid ongoing scrutiny of Anthropic's new Mythos AI technology. The government first placed and later removed export controls on Anthropic's Fable 5 AI model, a derivative of Mythos, on concerns that it could be used for harmful purposes by malicious actors.
OpenAI IPO Watch, Retail View
OpenAI's discussion comes as the AI startup has reportedly pushed its IPO to next year, although that has not been confirmed by the company so far. The delay comes as OpenAI has trailed behind Anthropic, which appears to be on track for an IPO by the fourth quarter of this year.
Retail investors are closely eyeing developments for both companies and are picking exposure to them through market-traded funds such as KraneShares Public-Private AI & Technology ETF (AGIX), Fundrise Innovation Fund (VCX), Destiny Tech100 (DXYZ), and those run by ARK Investment Management.
On Stocktwits, the retail sentiment was 'bearish' for both Anthropic and OpenAI late Monday.
For updates and corrections, email newsroom[at]stocktwits[dot]com.
Yuvraj Malik has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits.
