U.S. venture funding has ticked higher this year, led by the AI investment boom. But not all geographies have shared equally in the gains.

Among the biggest states for startup funding, California has seen by far the largest rise in total investment. Others — including Colorado, New Jersey and New York — are also up for the year, per a Crunchbase analysis of startup funding by state.

Some of the big venture hubs, however, are down. The standout here is Massachusetts, where startups have pulled in just over $10.7 billion in 2024 — well behind last year’s pace.

For a bigger-picture view, below we chart out funding totals for the eight states with $2 billion or more in venture funding so far this year.

Gains go to states with heavily funded generative AI startups

There are, of course, many complex dynamics at play in determining why a particular state or metro area might see its startup investment fortunes rise or fall. However, in 2024 there was also a simple explanation for the funding pattern: generative AI.

To a great degree, the largest rounds of the year went to a handful of AI companies working on large language models and underlying technologies to scale them. And it so happens that these startups are highly concentrated in Northern California.

Most of these are familiar names: OpenAI, xAI, Anthropic, Safe SuperIntelligence and Scale AI collectively raised over $15 billion this year alone. And all are based in the San Francisco Bay Area.

Other states with investors’ favored AI companies also gained in the rankings. Funding to New Jersey startups, for instance, is already up 37% year over year, thanks mostly to AI cloud infrastructure company CoreWeave, which raised a $1.1 billion Series C in May.

Massachusetts and Texas see declines

Then there’s Massachusetts. While the Boston startup scene is famous for biotech and deeptech talent, the city has lagged other hubs in creation of ultra-high-valuation AI unicorns.

That may explain why so far this year, total funding to Massachusetts startups is down around 23% from the 2023 total. While we should see a bit of catch-up in the last few weeks of the year, it’s still shaping up as a down year.

It’s not necessarily a worrisome indicator. Although no Massachusetts companies have scored rounds of $1 billion or more this year, there have been at least 30 valued at $100 million or higher. This includes a $405 million Series F for battery technology company Form Energy and a $400 million Series A for obesity drug developer Kailera Therapeutics.

Texas also looks on track for a down year, with around $4.8 billion going to Lone Star State startups so far in 2024, compared to $6.2 billion in all of 2023. Again, there’s time to catch up, but the odds of doing so are relatively slim at this point in the year.

While there were no equity rounds of $1 billion or more for Texas startups, at least seven did close financings of $100 million or more this year. The largest included a $244 million Series D for Houston-based geothermal energy startup Fervo Energy and a $232 million Series C for Austin-based endpoint security provider NinjaOne.

Washington, with just over $2.5 billion in funding to date, also looks on track for a year-over-year decline. Largest rounds this year include a $144 million Series B for cell therapy developer Outpace Bio and a $140 million Series C for security startup Chainguard.

In other states, funding looked flatter

In three other states — New York, North Carolina and Florida — funding looked flatter.

New York is actually up a bit, boosted by a $1 billion late-stage round for cybersecurity provider Wiz. Florida, meanwhile, is down a bit, possibly due to the absence of mega-sized rounds for crypto and Web3 related companies so far this year.

Then there’s North Carolina, which looks like it had an up year based on its topline number. However, most of the total came from a single round: a $1.5 billion Disney investment in 33-year-old Epic Games, which is still private but too old to fit in the startup category. Without that deal, funding would’ve been flat.

Big takeaway: It’s not easy to grow a new tech hub

One overarching conclusion we can draw from this year’s state funding tallies is that although we may have great enthusiasm for up-and-coming startup hubs, it takes more than excitement to unseat Silicon Valley.

Northern California’s combination of deep-tech talent, strong embedded networks, rich capital resources and powerhouse universities remains unrivaled in its ability to scale transformative startups. It’s still the place where investors spend the largest share of their money, by a long shot.

Related reading:

• The SF Bay Area Has Become The Undisputed Leader In AI Tech And Funding Dollars
• CoreWeave Raises $7.5B In Debt For AI Push
• NinjaOne Grabs $1.9B Valuation After $232M Series C
• Cloud Security Firm Wiz Raises $1B At $12B Valuation

Illustration: Dom Guzman