Bay Area is the $154B Startup Ecosystem Golden Goose. Sacramento Wants to Kill It.

The numbers don’t lie: Bay Area startups raised $154 billion in 2025—more than the next 9 top startup regions COMBINED. And yet California politicians are doing everything they can to drive this engine of prosperity out of the state.

Archived tweet

SF Bay Area and California is too important for American innovation for us to just cede it to the worst policymakers and their worst policies. If you care about tech you have to start paying attention to local and state politics a lot more than you look at national culture war. https://t.co/NLdcadDHnB [Quoting @PeterJ_Walker]: Top 10 startup geos for 2025, according to Dealroom data. Bay Area: $154 billion raised Next 9: $118 billion raised. Yes, a lot of the Bay number comes from a tiny number of AI labs - but it's still pretty wild. Data shows fundraising based on headquarters location https://t.co/2y6VQuweH7

Garry Tan @garrytan January 29, 2026

If you care about tech, you have to start paying attention to local and state politics a lot more than national culture war debates. The policies being cooked up in Sacramento right now will determine whether the next generation of tech giants are built here—or somewhere else.

The $154 Billion Reality Check

According to Dealroom data, Bay Area startups raised $154 billion in 2025. For context, that’s more than NYC ($26B), LA ($18B), London ($18B), Boston ($14B), Austin ($9B), Paris ($8B), Seattle ($7B), Beijing ($7B), Bangalore ($6B), and Denver ($6B) combined.

Yes, a lot of this is driven by AI labs. But that’s the point—the AI revolution is being built right here in San Francisco. OpenAI and Anthropic, both headquartered in SF, accounted for 30% of ALL venture investment nationwide in Q4 2025. OpenAI alone has raised over $60 billion and created thousands of jobs.

This isn’t luck. SF Bay startups succeed at 2.5x the rate of startups anywhere else in the world. There’s a reason the best founders in the world still come here.

Local Politics > National Culture Wars

National culture war debates get all the attention but don’t affect whether your startup can actually operate. State and local policies on taxes, housing, and regulations? Those determine whether companies stay or leave.

California politicians are actively considering policies that would make it impossible to build companies here. And while you’re doom-scrolling Twitter arguments about federal politics, they’re quietly moving forward with plans that will gut the innovation economy.

The Wealth Tax Time Bomb

Here’s the part that should scare every founder: California’s proposed wealth tax would tax unrealized gains—paper wealth that founders literally cannot access.

A unicorn startup founder becomes a paper billionaire around a $5B valuation. Under this proposal, they’d instantly owe $100M+ in taxes on wealth that exists only on paper. They can’t sell the shares. They can’t access the money. But Sacramento wants its cut anyway.

YC produces 2-4 unicorn founders per year. Every single one would face this tax bomb if it passes.

And here’s the kicker: 10% of California’s income tax withholding revenue comes from just four tech companies—Apple, Google, NVIDIA, and Meta. Economists are already warning that “other examples of wealth taxation tell us that in the end, people relocate.”

Fight or Flight

We’re going to fight for free enterprise and the right to start startups in California. But the warning is clear: if we lose, tomorrow’s tech giants won’t be in California in 10 years or less.

The engine of prosperity must be fought for. We can’t let bureaucrats eat the golden goose.

This isn’t about protecting billionaires—it’s about protecting the ecosystem that creates jobs, innovation, and the tax base that funds everything California claims to care about. Kill the tech industry and you kill the funding for schools, infrastructure, and social programs.

The data is unambiguous: Bay Area is the undisputed capital of innovation. But that dominance isn’t guaranteed—it has to be defended. Start paying attention to local and state politics before it’s too late.

Follow @garrytan for more.