Two SF AI giants raised almost half of all Q1 venture funding

The venture and startup industries are increasingly being divided between a small number of haves in San Francisco and a much larger number of have-nots, a new report indicates.Venture investment in U.S. startups more than doubled in the first quarter from the same period last year to $91.5 billion, according to the report from industry research firm PitchBook. But nearly half of that tally went to just two San Francisco artificial-intelligence companies — OpenAI and Anthropic.Meanwhile, U.S. venture firms raised $10 billion in the period, about 7% more than last year. But if the industry continues at that pace for the rest of this year, it would raise the least amount of capital since 2013. And firms closed just 87 new funds last quarter, 13 fewer than last year.

San Francisco attracts more venture capital

“The discrepancy between the haves and the have-nots has really expanded,” said Emily Zheng, a senior venture capital analyst at PitchBook.San Francisco attracts more venture capital than any other city in the world, so the state of the industry has big implications for The City and its economy.In terms of the total number of dollars invested in U.S. startups last quarter, the industry would seem to be thriving. The $91.5 billion tally was the highest amount for a single quarter since the fourth quarter of 2021, during the immediate post-pandemic boom, according to PitchBook’s data. It’s also about 43% of what venture firms invested in U.S. startups all last year and more than they invested in 2017.But those dollars were highly concentrated. OpenAI alone accounted for $40 billion of the total. Another $4.5 billion went to Anthropic, spread across two rounds. All told, the top 10 biggest funding rounds of the quarter — which went to just nine companies — together added up to $53.3 billion, or 57% of the total.