One reason California\u2019s economy succeeds despite the numerous hurdles it puts in front of industry is that it\u2019s the king of venture capital, the nectar of big-scale business breakthroughs.<\/p>\n
Investors offered young U.S. companies a total of $589 billion in much-needed seed money in the year ended in June, according to my trusty spreadsheet\u2019s peek at PitchBook reports<\/a>.<\/p>\n During those 12 months, Bay Area-based companies got $411 billion of these investments, primarily to fund the battle for artificial intelligence supremacy. That\u2019s 70% of all VC funding, which spurs immediate business activity that could produce the next corporate giant or two.<\/p>\n Meanwhile, Southern California got $21 billion, or 4% of all venture capital investments. That may seem small, but only New York City got more: $45 billion, or 8%. Boston was No. 4 at $20 billion, or 3%.<\/p>\n This cash inflow seems to be a ringing endorsement from smart investors taking rather large risks: California ain\u2019t perfect, but if you want to change the business world, it\u2019s the place to be.<\/p>\n Fast growth<\/p>\n Look at the impact of this innovation mindset on California\u2019s economy, as reflected in the calculation of gross domestic product<\/a>.<\/p>\n California has averaged 3.7% growth in this broad measure of business output over the last 20 years. That\u2019s the seventh-fastest jump among the states and well above the nation\u2019s 2.1% expansion pace.<\/p>\n The \u201cinformation\u201d industry, an economic niche dominated by tech-savvy folks who attract all that venture capital, accounted for 30% of California\u2019s GDP growth since 2006. Nationally, information was only 16% of U.S. GDP growth.<\/p>\n The information industry was more important to growth in just two other states: Connecticut, with a 45% share of its meek 0.8% historic annual expansion pace, and Washington state, with 35% of its 3.7% growth \u2013 second-fastest among the states.<\/p>\n And in 2026\u2019s first quarter, when California\u2019s 3.7% GDP growth ranked second-best among the states, the highest ranking since 2013<\/a>, information was tied to 36% of the Golden State\u2019s business output.<\/p>\n Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com<\/a><\/p>\n