L.A. Startups Pulled $3.1 Billion in Q1, Up 15% — and Not Just for AI

Venture capital and private equity investors poured $3.1 billion into 144 deals across the Los Angeles area in the first quarter, up 15% from a year ago, according to research firm CB Insights. The money went well beyond AI — into healthcare, e-commerce and defense technology.

The figures cover Los Angeles, Ventura, Orange, Riverside and San Bernardino counties. Funding in the greater L.A. region has climbed steadily since 2023, when investment cooled after the collapse of the cryptocurrency exchange FTX.

What were the biggest L.A. deals?

Early this year, private equity giant Blackstone bet $300 million on DDN, a Chatsworth-based data-storage company that has been around for more than two decades. DDN — short for DataDirect Networks — stores and manages the massive data troves that power AI systems, and employs roughly 1,000 people. Its customers include Nvidia, Elon Musk's AI startup xAI, Google Cloud and Ford.

"They have a trillion dollars of assets under management, and it's a company that we thought would really move the needle for us in terms of extending our reach," said Jyothi Swaroop, DDN's chief marketing officer, referring to Blackstone.

Other top first-quarter raises, per CB Insights:

• Econic Partners, an economic consulting firm — $438 million, the largest figure, drawn from a U.S. Securities and Exchange Commission filing. Econic disputed the total, saying it raised nine figures, but declined to specify the amount.
• Whatnot, a Culver City live shopping app — $265 million, one of the region's biggest deals this year.
• Epirus, a Torrance-based defense company building technology against drone-swarm attacks — $250 million.
• Latigo Biotherapeutics, a Thousand Oaks developer of non-opioid pain treatments — $150 million.

L.A.-area startups received $1.8 billion in the third quarter, the region's highest quarterly amount on CB Insights' tally — and most of it went to a single company.

Why is the money spreading beyond AI?

Investors say L.A.'s deal flow has diversified away from the ad tech and video apps of past cycles.

"Today it's going into much more ambitious projects," said Mark Suster, general partner at Santa Monica-based Upfront Ventures. "It's going into satellites, alternate energy, national defense, drones, shipbuilding and pharmaceutical drug discovery. So it's a lot more exciting than it ever has been."

Masha Bucher, founder and general partner at Day One Ventures, called El Segundo the most promising hub for "deep tech" startups tackling problems such as water scarcity. The region draws on a highly qualified aerospace and defense workforce, and Silicon Beach sits close to the airport — handy for entrepreneurs flying to San Francisco to raise money.

"There is a power of community, and it's definitely like a power spot on the map," Bucher said. Her firm's investments include AI startups and an eye-scanning crypto project backed by OpenAI's Sam Altman that lets people verify they're human.

How does Whatnot fit the picture?

Whatnot, founded in 2019, lets users buy and sell clothing and collectibles through live videos, asking sellers questions in real time, hunting deals and bidding onscreen. The company says it surpassed $3 billion in sales in 2024 and expects that figure to double this year.

"Live and social shopping has the potential to be an absolutely monstrous market," Chief Executive Grant LaFontaine said.

The startup, which has roughly 750 employees across the United States and Europe, isn't profitable yet. The $265 million round will fund marketing to attract users and hiring to improve the shopping experience, LaFontaine said. Like other businesses, Whatnot uses AI for customer service and content moderation — but LaFontaine keeps the technology in perspective.

"I tend to be sort of a purist, which is that consumers don't care about AI. They care about problems being solved," he said.

Tech companies including OpenAI and Google, along with payment services, are pushing AI-powered shopping tools, though those experiments remain early.

How does L.A. compare nationally?

Nationally, venture capital reached $90.5 billion last quarter, with Silicon Valley capturing $58.9 billion of it, CB Insights said. OpenAI secured the largest round — $40 billion, valuing the company at $300 billion.

Globally, $121 billion in venture capital was raised in the first quarter, with AI companies taking 20% of deals — the highest share ever, per 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," said Jason Saltzman, the firm's head of insights. "Everyone recognizes the promise, and ... no one wants to miss out on the promise."

"People understand that this is a transformative technology," said Chris Lehane, OpenAI's vice president of global affairs. "It's going to permeate virtually every aspect of life."

California legislators are weighing AI regulation, and some tech lobbying groups worry the bills could stifle innovation. Suster doesn't expect the dollars to leave.

"The opportunity set is so great here," he said. "Do we occasionally get backwards-looking bills that try to overregulate how industry works in California? Of course, we do. We find ways to work around them."