OpenAI and Anthropic Fuel California’s Record-Setting Investment Surge

California is reportedly seeing an historic wave of investment due to Silicon Valley’s artificial intelligence (AI) boom.

Companies there have taken in around $366 billion in venture capital this year, with just two artificial intelligence (AI) firms—OpenAI and Anthropic—accounting for half that total, The Wall Street Journal (WSJ) reported Thursday (Aug. 20), citing Pitchbook data.

The report said the $366 billion figure is more than three times the amount of venture capital (VC) funding that has funneled into the other 49 states this year put together, and almost double California’s previous record, set last year.

OpenAI in March raised $122 billion, the largest funding round in the history of Silicon Valley, while Anthropic has taken in $95 billion in two rounds of financing.

In all, more than 4,000 California-based startups have raised money this year, the WSJ added, again citing Pitchbook figures. Not all of them were AI companies: defense manufacturing company Hadrian Automatic raised $1.37 billion and live commerce platform Whatnot raised $545 million, both rounds announced earlier this month.

The WSJ noted that it’s not unusual for new technologies to “agglomerate”—or concentrate—around one geographic area, such as the automotive industry in Detroit. But what’s happening in Silicon Valley is a different case, economist Enrico Moretti told the WSJ.

“It’s an amount of agglomeration that surpasses even previous waves,” said Moretti, who is based at the University of California at Berkeley, and who studies the geography of jobs.

He said the phenomenon illustrates—as the WSJ puts it—“the extraordinary returns to creativity and innovation,” which research indicates can be strengthened when people work in proximity and share ideas.

Moretti added that a “thick” labor market of people with specialized skills, and companies that need those workers with those abilities, helps as well.

In other AI news, recent PYMNTS Intelligence research examines levels of enterprise adoption across a variety of industries, finding that it is not happening evenly within organizations.

According to data shared in the August edition of The Enterprise AI Benchmark Report, the most important dividing line might not be a question of industry, budget constraints or even enthusiasm among executives.

“Instead, AI appears to be scaling fastest in functions where companies already have structured data, technical ownership and outcomes that can be measured with relative precision,” PYMNTS wrote Thursday.

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