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AI startup funding hit a record in L.A. area last quarter. Here's who got the most money

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AI startup funding hit a record in L.A. area last quarter. Here's who got the most money

The Bay Area has long held the title for attracting the most venture capital funding in the nation, and that naturally includes the hot market for artificial intelligence startups. After all, San Francisco is home to some of the most prominent AI players, including ChatGPT maker OpenAI.

But the Greater L.A. area is growing its presence in this space. The region broke a record in the third quarter, capturing $1.8 billion in VC investment for AI startups with a total of 31 deals, according to a new report by research firm CB Insights. L.A. ranked as the second-biggest market for AI investments, up from the second quarter, in which it ranked behind Silicon Valley, New York and Boston.

The big bump came mostly from a single deal: a $1.5-billion funding round for Costa Mesa-based defense technology firm Anduril Industries, the report said. The deal, which was announced in August, was led by Founders Fund and Sands Capital. The round valued the seven-year-old business at $14 billion.

Anduril, which manufactures autonomous weapons systems, including submarine drones, has said it would use the additional investment “to increase hiring, enhance processes, upgrade tooling, increase resiliency in its supply chain and expand infrastructure.” The company, co-founded by entrepreneur Palmer Luckey, has signed more than $1 billion in public contracts with the U.S. and allied governments. His company and other tech businesses that serve the defense industry are expected to get a boost from the incoming Trump administration.

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For years, L.A. has been working to build itself as a major home for innovative technology, even at one point marketing the region as “Silicon Beach.” Some hope that AI can help boost Southern California as a tech destination, especially with applications in areas such as manufacturing, entertainment and healthcare.

“L.A. is definitely becoming a serious tech hub,” said Ivan Nikkhoo, a managing partner with Navigate Ventures, adding that the area has plenty of schools providing engineering talent and a lot of networking events. “All the elements are there.”

While Los Angeles is the epicenter of entertainment, where AI is expected to have serious ramifications, much of the recent tech investment was focused on other industries, including healthcare.

Startups in the L.A. region that raised significant capital in the quarter included Regard, a business that is offering an AI-powered clinical insights platform for doctors. The firm raised $61 million. Another healthcare-based company, Pearl, which creates artificial intelligence tools to help read dental patient X-rays, raised $58 million — which the company says is the biggest investment ever in dental AI.

Pictor Labs, a West Los Angeles-based startup spun off from the UCLA engineering school, raised $30 million in the third quarter, bringing its total venture capital investment so far to about $49 million. Pictor Labs uses AI to quickly analyze tissue samples digitally. The startup says it could save pathology labs significant time and resources, as well as reduce labs’ footprint in toxic reagents.

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“It shows the strong interest and support of our investors for AI-driven solutions, particularly in the healthcare sector,” said Pictor Labs Chief Executive Yair Rivenson. The funding will help grow the company’s 24-member staff and accelerate its product development, Rivenson said.

AI startups globally saw the number of deals increase to 1,245 in the third quarter, up 24% from the previous quarter, indicating investor interest remains strong in the category, according to CB Insights. Overall venture deals declined 10% compared with the previous quarter, the research firm said. In the L.A. area, venture capital investments bucked national trends, rising 38% compared with the second quarter.

The U.S. market captured 68% of the global venture capital funding in AI companies, with Silicon Valley taking up roughly half of that amount.

Hollywood studios are in discussion with companies such as OpenAI to potentially license video footage to train AI models. And last month, L.A. residents got a sneak peek at what that could look like at a generative AI film competition in Culver City.

The so-called Culver Cup competition, which was hosted by Amazon’s AWS Startups and L.A.-based tech firm FBRC.ai, showcased eight films that were created with AI tools. The winning film was a narrative that explored how food helped an elderly woman with dementia remember her life with her late husband. Judges noted that the top films honed in on truly human stories.

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AI is particularly controversial in Hollywood, where entertainment industry unions have fought hard for protections against digital automation that could kill jobs.

“People are really fearful about what they don’t know,” said Todd Terrazas, co-founder of FBRC.ai. “Having these types of showcases help show people what is possible today with these tools.”

Terrazas said he has noticed more investments in the area’s AI startups during the last two years. L.A. has an edge over other cities’ AI communities in entertainment, media, aerospace, manufacturing and gaming, he said.

“I think it’s really us leaning into our strengths with the industries that are prominent here in Los Angeles and doubling down on building these new startups,” he said.

There will also be an AI International Film Festival, screening around 20 short films, held at the Los Feliz Theatre next month.

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U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders

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U.S. Space Force awards .6 billion in contracts to South Bay satellite builders

The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.

The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.

Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.

The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.

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The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.

Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.

“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.

The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.

Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.

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Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.

Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.

Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”

The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.

Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.

None of the 42 locations where the product was sold were in California.

Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.

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“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”

The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.

The company recalled the following types of salad dressing:

  • Creamy Poblano Avocado Ranch Dressing and Dip
  • Ventura Caesar Dressing
  • Pepper Mill Regal Caesar Dressing
  • Pepper Mill Creamy Caesar Dressing
  • Caesar Dressing served at Costco Service Deli
  • Caesar Dressing served at Costco Food Court
  • Hidden Valley, Buttermilk Ranch
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They graduated from Stanford. Due to AI, they can’t find a job

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They graduated from Stanford. Due to AI, they can’t find a job

A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.

The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.

When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.

Top tech companies just don’t need as many fresh graduates.

“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”

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While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.

Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.

“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”

The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.

Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.

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“The industry for programmers is getting very oversaturated,” Akgul said.

The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.

Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.

It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.

In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.

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Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.

Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.

A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.

“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”

To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.

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Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.

Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.

Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.

As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.

“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”

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After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.

Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.

“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”

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