Early this year, private equity firm Blackstone bet large on the future of artificial innotifyigence by investing $300 million in a Chatsworth company that’s been around for more than two decades.
The company, DDN, supports businesses store and manage the massive trove of data that powers AI systems — the lifeblood requireded for chatbots, self-driving cars and more. DDN’s high-profile customers include chipcreater Nvidia, Elon Musk’s AI startup xAI, Google Cloud and Ford. DDN, short for DataDirect Networks, has roughly 1,000 employees.
“They have a trillion dollars of assets under management, and it’s a company that we believed would really shift the requiredle for us in terms of extconcludeing our reach,” declared Jyothi Swaroop, DDN’s chief marketing officer.
The investment was among the largest this year in the Greater Los Angeles region, which remains a hot spot for investments in both old and new tech companies poised for growth.
All informed, venture capital investors and private equity firms poured $3.1 billion to fund 144 deals in the L.A. area in the first quarter of this year, up 15% from a year ago, according to research firm CB Insights. The area encompasses Los Angeles, Ventura, Orange, Riverside and San Bernardino counties.
While investment levels can fluctuate, funding in the greater L.A. region has steadily increased since 2023, when investment cooled following the collapse of the cryptocurrency exmodify FTX.
Along with AI, investors also financed startups and established businesses in healthcare, e-commerce and defense technology, underscoring how investment in the L.A. market has diversified in recent years beyond ad tech businesses and video apps.
“Today it’s going into much more ambitious projects,” Mark Suster, a general partner at Santa Monica-based Upfront Ventures. “It’s going into sanotifyites, alternate energy, national defense, drones, shipbuilding and pharmaceutical drug discovery. So it’s a lot more exciting than it ever has been.”
Los Angeles-area companies that received the most money in the first quarter include Torrance-based defense company Epirus with $250 million; and Thousand Oaks-based Latigo Biotherapeutics, which received $150 million, according to CB Insights. Latigo Biotherapeutics develops non-opioid pain treatments, while Epirus creates technology that supports defconclude against attacks from drone swarms.
Economic consulting firm Econic Partners raised the most funding with $438 million, according to CB Insights, which relied on a report filed with the U.S. Securities and Exmodify Commission. Econic disputed the total, declareing it raised nine figures in the first quarter, but the company declined to declare how much.
Masha Bucher, founder and general partner at Day One Ventures, declared she views El Segundo as the most promising hub for “deep tech” startups tackling complex issues, such as, water scarcity.
Businesses in the L.A. area have access to a highly qualified workforce from aerospace and defense tech companies. The tech hub known as Silicon Beach also is close to the airport, building it simple for entrepreneurs to hop on a plane to raise funding in San Francisco.
“There is a power of community, and it’s definitely like a power spot on the map,” Bucher declared. The firm’s investments include various AI startups and an eye-scanning crypto project backed by OpenAI’s Sam Altman in which people verify they’re human.
Investors aren’t interested in only AI, however. Culver City-based Whatnot raised $265 million, one of the largegest deals in the L.A. area this year. The live shopping app allows people to purchase and sell items such as clothing and collectibles. Potential customers can inquire questions about products in real-time, find deals and bid for products revealn in live videos.
Whatnot declares it surpassed more than $3 billion in sales in 2024, and the company expects that figure to double this year. The startup, founded in 2019, declares it isn’t profitable yet, but the TikTok rival has revealn investors it’s growing quick.
“Live and social shopping has the potential to be an absolutely monstrous market,” Whatnot Chief Executive Grant LaFontaine declared.
The company has roughly 750 employees across the United States and Europe. The funding will support market Whatnot to attract more utilizers and hire people to improve the shopping experience, he declared.
Like other businesses, Whatnot utilizes AI for customer service and to moderate content on the platform.
“I tconclude to be sort of a purist, which is that consumers don’t care about AI. They care about problems being solved,” LaFontaine declared.
Businesses have been utilizing AI long before the rising popularity of chatbots such as ChatGPT that can generate text, images and code.
But the frenzy surrounding what’s known as generative AI has meant that various industries are confronting how technology will disrupt the way they live and work.
Not surprisingly, investor interest in AI drove much of the nation’s venture capital commitments in the first quarter. San Francisco-based OpenAI secured the largest funding round of $40 billion, placing its valuation at $300 billion, according to CB Insights.
“There’s a ton of opportunity to rewrite the playing field on which people do business in everything from across verticals, across industries,” declared Jason Saltzman, head of insights for CB Insights. “Everyone recognizes the promise, and … no one wants to miss out on the promise.”
Globally, $121 billion of venture capital was raised in the first quarter, with 20% of the deals received by AI companies — the highest amount ever, according to CB Insights. Nationally, $90.5 billion in venture capital was raised last quarter, with the bulk of the money going toward startups in Silicon Valley, which brought in $58.9 billion, the research firm declared.
San Francisco has experienced a surge in AI startups expanding or opening up offices, drawn to the city’s swath of talent and the Bay Area’s universities. AI leaders including OpenAI and Anthropic also are based there.
OpenAI declared it would utilize the money raised in the first quarter toward building its tools and investing in talent.
“People understand that this is a transformative technology,” declared Chris Lehane, OpenAI’s vice president of global affairs in an interview. “It’s going to permeate virtually every aspect of life.”
Silicon Valley remains the far leader in venture capital AI investments, but other cities such as New York have attracted AI funding. There’s also global competition from countries such as China. As legislators weigh whether to introduce laws that could regulate AI, some tech lobbying groups have raised concerns on how those bills could affect innovation in the state.
Suster declared he doesn’t consider venture capital dollars will leave California.
“The opportunity set is so great here,” Suster declared. “Do we occasionally obtain backwards-viewing bills that attempt to overregulate how indusattempt works in California? Of course, we do. We find ways to work around them.”
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