Funding for AI Companies Concentrated in Major Hubs

Funding for artificial intelligence (AI) companies is becoming remarkably concentrated in just three regions, underscoring potential risks faced by other established tech ecosystems.

According to analysis by Startup Genome, nearly 80% of venture capital (VC) funding for AI-native companies went to Silicon Valley, Beijing, and Paris between 2023 and 2024. AI-native companies are those focused on building advanced generative models and AI-specific solutions.

The Dominance of Silicon Valley

Silicon Valley alone accounted for 65% of the $47 billion raised by AI-native companies during this period across 40 top-performing tech ecosystems. This is more than double its share of the total tech industry investments, which stood at 32% of the $152.2 billion raised overall.

Comparative Funding Trends

Beijing and Paris followed suit, securing 10% and 4.3% of all AI-native funding, respectively, both exceeding their shares of total tech fundraising. Remarkably, Toronto-Waterloo was the only other location to achieve a greater portion of AI-native funding compared to overall tech funding.

Challenges for Established Hubs

In contrast, major ecosystems such as London and Tel Aviv — known for fintech and cybersecurity respectively — captured a smaller percentage of capital for AI-native start-ups than for general tech start-ups.

Arnobio Morelix, CEO of Sirius Education and senior adviser to Startup Genome, noted that these established hubs are ‘having a hard time translating their leadership in general tech ecosystems into AI’. The risk of slow adoption of AI technologies could mean a loss of talent and innovation leadership.

Finding a Niche

Mr. Morelix emphasized that while AI’s growth is vital, ecosystems need not compete directly with industry giants like OpenAI and Silicon Valley. Instead, they should ‘find their niche’ and focus on specific AI applications.

Growing Global Interest in AI

Mal Filipowska, head of global platforms for Seedstars, highlighted a trend of founders from developing nations migrating to major AI hubs, stating that ‘even if founders are originally from emerging markets, they are often building their companies in Silicon Valley’.

Beijing as a First-Mover

Notably, Beijing has emerged as the top ‘AI first-mover’, receiving 66.2% of its total VC funding for AI-native companies, a significant rise compared to its general start-up ecosystem ranking.

The Speed of AI Start-Up Growth

Preliminary figures from PitchBook indicate that AI companies captured a record 57.9% of the $126.3 billion in global VC in Q1 2025, underscoring the rapid scaling ability of AI start-ups. Rashmi Gopinath from BAM Capital pointed out that AI start-ups ‘are getting to revenue scale significantly faster and with much leaner teams’.
However, Gopinath warns that investors should concentrate on ‘how AI is creating tangible, measurable value’ rather than chasing the hype. As concerns about excessive capital flow into AI continue, industry experts like Carlos de la Vega from the Global Private Capital Association caution that ‘there’s too much capital going into AI compared with other sectors’. Can the concentration of funding shift, or is this the new normal for AI ecosystems?

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