Getting your
Trinity Audioplayer ready...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’s peek at PitchBook reports.
During 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.
Fast growth
Look at the impact of this innovation mindset on California’s economy, as reflected in the calculation of gross domestic product.
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.
And in 2026’s first quarter, when California’s 3.7% GDP growth ranked second-best among the states, the highest ranking since 2013, 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 jlansner@scng.com