Thanks in large part to the AI sector, startups based in the San Francisco metro region \u2014 which includes Oakland \u2014\u00a0raised $111.7 billion through the first three quarters of 2025<\/a>, according to PitchBook and the National Venture Capital Association. That figure set an annual record with three months still left in the year. That tally represented nearly 45% of all the venture money invested nationwide in a year in which the total amount of venture investment reached the second highest level ever<\/a>.<\/p>\n Although much of that cash went to OpenAI, Anthropic and a handful of other companies, hundreds of other local startups also garnered funds. All told, companies in the San Francisco metro area closed 1,818 funding deals in the first three quarters of last year, or 17% of all deals closed nationwide.\u00a0<\/p>\n In the past, a surge in venture investment has typically translated into a corresponding rise in hiring in the tech sector, Raisz said. Startups use the money they\u2019ve raised to hire new people to grow their operations and their sales, she said \u2014 but so far, that\u2019s not happening this time around.<\/p>\n \u201cFor the first time, maybe ever, venture capital and AI investment are still flowing very strongly in San Francisco, but the capital is not translating into these sort of broad-based hiring upticks,\u201d she said.<\/p>\n Raisz and other analysts have some theories about why San Francisco hasn\u2019t seen a hiring surge even as layoffs are down and venture funding is up.<\/p>\n <\/p>\n
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No matter what happens in 2026, the president will claim progress\u00a0<\/p>\n Perhaps the biggest factor is that much of the funding being raised is going to the biggest AI companies, and they\u2019re using the money to build or use data centers built around pricey<\/a> and energy-gobbling<\/a> Nvidia chips to train and run their models. OpenAI, for example, has committed to spending $1.4 trillion<\/a> on data-center infrastructure in coming years \u2014 far more than it has raised in venture capital.<\/p>\n In other words, where startups in the past would use venture money to hire workers, the AI companies are using it for capital expenditures \u2014 theoretically long-term investments in equipment and computing.<\/p>\n \u201cAll that money\u201d OpenAI and other companies are raising \u2014 \u201cmost of it has been going toward the capex, the cap expenditures on AI,\u201d said J.P. Allen, a professor at the University of San Francisco\u2019s School of Management.<\/p>\n OpenAI subleased the buildings at 1455-1515 3rd St. in Mission Bay, pictured above, from Uber in October 2023.<\/p>\n Craig Lee\/The Examiner<\/p>\n Last year, generative-AI companies such as OpenAI and Anthropic listed an average of 410 jobs in San Francisco each month, according to data Egan gleaned from labor-market analysis company Lightcast. That was up from 240 per month in 2024 and 85 per month in 2023. AI positions accounted for 18% of all monthly tech job listings in San Francisco last year, up from just 4% in 2023.<\/p>\n But that jump in AI hiring hasn\u2019t made up for the overall hiring decline in the tech sector.<\/p>\n For each year between 2019 and 2022, the average number of tech jobs listed on a monthly basis never dipped lower than 3,875, and it went as high as 4,798 in 2019, according to data from Lightcast compiled by Egan. No year since then has seen an average monthly listing count higher than than last year\u2019s 2,295.<\/p>\n \u201cAI in its own terms is growing pretty fast,\u201d Egan said. \u201cIt looks like it\u2019s an important part of the tech [industry] turning the corner, but it\u2019s got a ways to go before AI itself is going to take us back to pre-COVID levels of hiring.\u201d<\/p>\n Another possible explanation for the seeming disparity between the low layoff numbers and the decline in tech employment is that the latest layoff figures are actually understated, Raisz said. EDD\u2019s numbers don\u2019t include layoffs made by smaller companies or by those that let go fewer than 50 workers at a time. So it could be that many more people in the area are being let go than show up in EDD\u2019s figures, she said.<\/p>\n But there are likely other factors weighing on tech employment in the area, analysts said. There continue to be concerns about broader economic uncertainty, relatively high interest rates, the effects of tariffs and the overall geopolitical situation, they said.<\/p>\n Following their big layoffs of 2022 and 2023, the big tech companies appear to be hesitant to go back on the hiring kick they were on before then, the analysts said. In part, that might be due to AI itself, either because the technology is already being used to replace workers or because companies are trying to find out whether it can do so.<\/p>\n \u201cI think it\u2019s clear that one of the reasons [tech companies] aren\u2019t hiring is because of AI,\u201d Egan said. \u201cOne of the sectors where AI has gotten the most adoption is in tech.\u201d<\/p>\n Recent reports have indicated that big companies have struggled to find any economic benefits from adopting new AI technologies. But anecdotal reports have suggested that AI tools are allowing at least some new startups to develop products with much smaller teams than they might have used in the past.<\/p>\n Being AI-focused from the start, \u201cprobably allows these companies to just hire fewer folks,\u201d Raisz said.<\/p>\n That said, the analysts were optimistic that hiring will pick up as AI is adopted more broadly. In past tech cycles, big jumps in business and employment growth were typically tied to the move from developing the underlying technology to developing applications for it, Egan said.<\/p>\n And he and the others are bullish that San Francisco, as the center of the AI industry, will benefit when that shift happens.<\/p>\n That shift to application development \u201ctakes a lot of work,\u201d Egan said. \u201cThat takes a lot of funding and trial and error and collaboration, and it doesn\u2019t happen overnight.\u201d<\/p>\n But the fact that San Francisco is already seeing a disproportionate number of venture-funding deals in the sector and office leases by AI companies are increasing is a good sign for the future, he said.<\/p>\n \u201cThat\u2019s really what you want to see at this stage,\u201d he said.\u00a0<\/p>\n
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