Startups and small AI developers are the backbone of California’s innovation economy. Unlike Big Tech, they don’t have the lawyers, government affairs teams, or lobbyists ready to react to new regulations. Every bill passed in Sacramento carries the potential to shape, or to crush, the next great idea.

When policies are vague, overly broad, or tilted toward the largest companies, Little Tech is the first to feel the impact. Instead of fostering innovation, there is a risk of forcing entrepreneurs out of the market, consolidating power in Big Tech, and stifling creativity.

If California wants to remain the global leader in tech and the U.S. the leader in AI, regulations must be clear, scalable, and designed to encourage innovation. Startups need the freedom to research, invent, hire, and compete without being buried in red tape.

Why AI Matters for California...

Economic Contribution:

• California's tech industry, including AI startups, is projected to contribute approximately $1.5 trillion to the state's GDP by the end of 2025, accounting for about 15% of the state's total economic output.
• The tech sector, driven significantly by AI, serves as a critical source of tax revenue for California, supporting public services and infrastructure.

Venture Capital Investment:

• In 2025, California captured 68% of all U.S. startup funding, with AI startups playing a major role, attracting over $110 billion in venture capital through July 2025.
• In 2024, venture capital firms invested over $50 billion into California-based startups, with AI being a key focus area alongside cybersecurity, fintech, and clean energy.

Job Creation:

• The tech sector, including AI startups, employs over 300,000 workers in the San Francisco Bay Area alone, contributing to high per capita income and wealth generation.

• AI startups are driving demand for skilled workers, attracting talent from across the U.S. and globally, boosting local economies through high-paying jobs.

Regional Dominance:

• California hosts 33 of the top 50 privately held AI companies globally, underscoring its leadership in the AI sector.
• San Francisco, San Jose, and Los Angeles are among the top U.S. metropolitan areas for AI readiness, with robust ecosystems of startups, tech giants, and venture capital firms.

Innovation and Infrastructure:

• AI startups in California are pioneering advancements in machine learning, robotics, healthtech, and environmental technologies, fostering innovation across industries.
• The state’s universities, such as Stanford, UC Berkeley, and Caltech, collaborate with AI startups, driving research and development and accelerating market innovations.