According to founders who have recently moved to San Francisco, even foreign founders who are not running AI startups are moving here to grow their companies. The AI startup boom in San Francisco is so big.
That's largely because tech talent and investor money are still overwhelmingly concentrated there, according to the latest data shared exclusively with TechCrunch by VC firm SignalFire.
According to SignalFire’s Beacon platform data, the SF Bay Area remains the largest, with 49% of all tech employees and 27% of startup engineers in the U.S. SignalFire, which prides itself on its big data-driven analytics, also reports that the Bay Area’s share of tech engineers will grow (not decline) through 2022, and that the talent pool is more than four times that of second-place Seattle. The region is home to 12% of all top VC-backed founders and 52% of startup employees, more than any other region.
“We find that anecdotes about San Francisco’s tech decline are overblown,” SignalFire partner (and former TechCrunch reporter) Josh Constine wrote in a recent blog post , declaring, “In terms of concentration of tech talent and capital, SF still dominates every other U.S. city, and with the recent AI boom, that lead is even greater.”
Unify founders relocate from Berlin after raising $8 million
Take Daniel Lenton, founder of Unify, a Londoner who originally lives in Berlin. A Y Combinator W23 alumnus, Unify is building a neural router that automatically routes individual prompts to the LLM most appropriate for the job. Using models from multiple AI sources, he says, it helps the company control costs.
Lenton, who raised $8 million for Unify from SignalFire, Microsoft's M12 Capital and Ronny Conway's A.Capital Ventures, said he had no trouble meeting Silicon Valley investors while in Berlin. He even talked to big companies.
“It wasn’t a huge challenge for me to talk to people like Andreessen, Sequoia, Accel,” he said. “You’re not excluded from the investment market when you’re not there. You can do a lot of things remotely, and you can even get introductions to people.”
But he returned to San Francisco after the YC experience, meeting with customers, prospects, partners, and collaborators each time. It was a month-long visit in June that made the decision to move.
“Within a week, every day of that week, I was having lunch in a different office at a different big AI tech startup,” he says. “We were brainstorming together on a whiteboard.”
There are countless other, more formal events, too. That’s part of the appeal, not least because of the “Cerebral” Valley, the San Francisco area that’s home to many AI startups and a budding social scene where many 20-somethings work. There are also investor dinners and events, like the recent Andreessen Horowitz event for AI founders that Renton attended. “It’s just very, very helpful.”
Renton relocated to San Francisco and made his startup's official headquarters there, but he didn't ask his eight team members, who lived in different cities, to come with him.
Lago moved to SF instead of New York.
Anh-Tho Chuong, co-founder and CEO of open-source billing platform Lago, has a similar view. She plans to move her and her company’s headquarters from Paris to San Francisco. Paris is the European hub for AI startup activity, home to groundbreaking startups like Mistral. Lago is a YC graduate (S21) and incorporated in the US, so moving to the US was always her plan. However, due to travel convenience and time zone issues, she planned to go to New York.
“A year ago, everyone was moving from SF to New York and saying SF was dead,” she told TechCrunch. But she spent the month of May working in San Francisco, and “everyone’s back.”
She’s not the only one who notices this and speaks out. Jason Lemkin, founder of SaaStr, a popular event-focused business software startup community, says: This week it was posted on X. “So I moved back to the San Francisco Bay Area full time, quietly, as so many leaders and executives I’ve known for years have done.”
Lemkin describes the area as “clearly the epicenter of the AI boom, even though a lot of it is based in Paris and other places.” Like others, he credits YC and other accelerators for bringing startups to the city. “The SF Bay Area is back.”
Chuong said she chose San Francisco because of how much easier it would be for her to build a company there. Lago is not an AI company, but it does count AI companies as its customers. It offers what it calls an open-source alternative to Stripe, with a focus on metering and usage-based billing. Lago has raised a total of $22 million so far from a number of angels and VCs, including SignalFire and FirstMark, she says.
Lago’s clients are mostly cloud startups, including many AI startups. She has grown the company through word of mouth and inbound requests, most of which come from Bay Area companies. “We think we have a better talent pool,” she said when looking for her first marketing hire. “We also have a better customer pool in San Francisco than anywhere else.”
manufactured luck
Chuong also credited YC with making San Francisco a hub, particularly for consistently hosting events ranging from alumni meetups to AI founder happy hours, in addition to the official events they currently host with their cohort and alumni-only social network, Bookface.
But every city has events, meetings, and people to hire. These two founders and SignalFire data point to another thing the Bay Area, and San Francisco in particular, offers: serendipitous connections.
When so many people in the same industry are crammed into a small space, it’s not uncommon to stumble across helpful people—it’s the norm. Chuong says she met three other YC founders working at similar companies in a building in San Francisco’s SoMa neighborhood where she was temporarily living. “We started collaborating on what we were building, what we were trying to do, and it all just happened very organically. And I felt like there was a lot of support here that I didn’t have to go to New York.”
That doesn’t mean startups built in the U.S. or elsewhere in the world can’t succeed. Many do. But as Y Combinator partner Diana Hu explained in a recent podcast, people choose to move because they think “San Francisco is the place in the world where you can make a fortune.”
