AI startup funding hit a record in L.A. area last quarter. Here’s who got the most money
As a long-time resident of Southern California and a tech enthusiast, I can’t help but feel a sense of excitement about the growing AI scene in our backyard – Los Angeles. For years, we’ve been known for our beautiful beaches, Hollywood, and traffic, but now we’re making a name for ourselves as a serious tech hub.
For quite some time, the Bay Area has been recognized as leading the way in receiving the highest amount of venture capital investments nationwide, and this extends to the bustling market for artificial intelligence startups. Given that San Francisco houses several major players in the AI field, such as OpenAI, creator of ChatGPT, it’s no surprise that this area is a magnet for such investments.
However, the Greater Los Angeles region is expanding its influence in this sector. In the third quarter, it set a new record by securing $1.8 billion in venture capital investment for AI startups, across 31 deals. This is according to a recent report by research firm CB Insights. Interestingly, Los Angeles moved up from its second-quarter position, where it was behind Silicon Valley, New York, and Boston in terms of AI investments.
Most of the significant growth can be attributed to a single transaction: a $1.5 billion investment round for Anduril Industries, a defense technology company situated in Costa Mesa. This deal was disclosed in August and was primarily spearheaded by Founders Fund and Sands Capital. As a result of this round, the seven-year-old enterprise is now valued at an impressive $14 billion.
Anduril, a firm specializing in autonomous weapons systems like submarine drones, announced they will utilize extra funding for purposes such as expanding their workforce, improving procedures, updating equipment, ensuring supply chain robustness, and broadening infrastructure. Co-founded by entrepreneur Palmer Luckey, this company has already secured over $1 billion in public contracts with the U.S. and its allies. Tech companies in the defense sector are anticipated to benefit from the new Trump administration.
For quite some time now, Los Angeles (L.A.) has striven to establish itself as a leading hub for groundbreaking technology, once branding the area as “Silicon Beach.” Many believe that Artificial Intelligence (AI) could further solidify Southern California’s status as a tech powerhouse, particularly in sectors like manufacturing, entertainment, and healthcare.
According to Ivan Nikkhoo, a managing partner at Navigate Ventures, it’s clear that Los Angeles is rapidly developing into a significant tech center. He points out that there are numerous educational institutions in the region nurturing engineering talent and an abundance of networking events, which suggests all the necessary components for growth are present.
Although Los Angeles is known as a hub for entertainment, it’s anticipated that Artificial Intelligence (AI) will significantly impact this area, yet a significant portion of recent technological investments has been directed towards other sectors, particularly healthcare.
In the L.A. area, startups that successfully secured substantial funding during the quarter include Regard, a business specializing in an AI-driven clinical insights platform for medical professionals. They managed to secure $61 million. Additionally, Pearl, a healthcare company focusing on developing AI tools for interpreting dental patient X-rays, garnered $58 million — a figure they claim is the largest investment ever in dental AI technology.
Located in West Los Angeles, startup Pictor Labs – a spin-off from UCLA’s engineering school – secured $30 million during the third quarter, adding to its existing venture capital investments which now total approximately $49 million. This innovative company employs artificial intelligence (AI) for rapid analysis of digital tissue samples. By doing so, Pictor Labs asserts that it could help pathology labs conserve time, resources, and minimize their use of harmful reagents, ultimately reducing their environmental footprint.
According to Pictor Labs CEO Yair Rivenson, this investment reflects a substantial enthusiasm and backing from our investors towards AI applications, with a focus on healthcare. This funding will enable us to expand our team of 24 and speed up the progress of our products’ development.
Worldwide AI startups experienced a surge in investment deals, reaching 1,245 during the third quarter – a 24% increase from the previous quarter. This growth suggests that investor enthusiasm for this sector remains robust, as reported by CB Insights. However, it’s worth noting that total venture deals saw a 10% decrease compared to the preceding quarter, according to the research firm. Interestingly, in the Los Angeles area, venture capital investments showed an upward trend, rising by 38% when compared to the second quarter, defying the national investment trends.
Approximately two-thirds (68%) of worldwide investment in artificial intelligence (AI) companies is held by the United States market, and around half of that total is controlled within Silicon Valley.
Hollywood production houses are negotiating with firms like OpenAI about the possibility of leasing movie clips for teaching AI systems. Last month, locals in Los Angeles had an exclusive preview of this concept during a generative AI film contest held in Culver City.
The Culver Cup contest, sponsored by Amazon Web Services Startups and L.A.-based AI company FBRC.ai, featured eight movies made using AI technology. The movie that won depicted a heartwarming story about an elderly woman with dementia who used food to recall her life with her deceased husband. The judges commended the top films for their focus on deeply emotional human narratives.
In the world of Hollywood, there’s a lot of debate surrounding AI, as entertainment unions have vigorously advocated for safeguards against automated technology that might lead to job losses.
Todd Terrazas, co-founder of FBRC.ai, remarked that “People tend to be quite apprehensive about the unknown.” He added that events like these demonstrations serve to illustrate the potential capabilities of these tools that are available today.
Terrazas said he has noticed more investments in the area’s AI startups during the last two years. L.A. has an edge over other cities’ AI communities in entertainment, media, aerospace, manufacturing and gaming, he said.
He expressed his viewpoint as, “It seems we should fully utilize our strong points within the thriving industries of Los Angeles and invest heavily in creating these emerging startups.
Excitedly speaking as a film enthusiast, I’m thrilled to share that next month, I’ll be partaking in the AI International Film Festival at the captivating Los Feliz Theatre! Over twenty thought-provoking short films showcased, all featuring the incredible capabilities of AI technology. Can’t wait!
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2024-11-08 14:31