At the HumanX conference in Las Vegas, investors not only discussed what the future of AI should be—they also debated where that future should unfold.
The Bay Area raked in more than half of all VC dollars spent on AI and machine learning deals in 2024, according to PitchBook data, but investors warned that more capital isn’t always better.
“With big investment, there’s also big waste,” said Stephen Nundy, partner and chief technology officer at the European firm Lakestar, during a panel on AI investing outside of Silicon Valley. “We don’t talk about all the money that’s been put up in flames by these centers of powers.”
In 2024, $69.8 billion of the total $134.6 billion invested globally in AI and ML was poured into startups in the Bay Area. Investors fear that such capital concentration can lead to reckless use of funds, pointing to the capital efficiency of startups in places like China.
Because many China-based startups receive funding from the government, they face greater demand to show profitability while being nimble, said Esther Wong, founder and CEO of the Hong Kong-based 3C AGI Partners. “There’s a lot of commercialization, because if I put money in you, you better show me the result,” she said. “More money doesn’t really automatically equate to good companies.”
Wong pointed to DeepSeek, the Chinese AI company that developed its model for significantly less than companies like OpenAI and Anthropic, as another example of how this baked-in difference in thinking can be much more beneficial to investors.
“Companies that take over eight years and still aren’t profitable but taking billions—you would never see this in China,” she said. “You die, you die very quickly.”
The stricter regulatory regimes in some countries can also help startups with global ambitions. Starting a company under tougher regulations creates proof points and eases the path for expansion into places with laxer rules, said Avid Larizadeh Duggan, senior managing director at the Teacher’s Venture Growth fund of the Ontario Teachers’ Pension Plan.
“If you want to become a multi-billion-dollar company, you have to go global,” said Larizadeh Duggan. “Working in a highly regulated space, having this in your DNA from the start, from Day 1—it helps.”
But one of the main lessons Larizadeh Duggan hopes investors pay attention to is the need for more perspectives outside Silicon Valley. Without that, innovation could stagnate.
“It’s not about one versus the other, it’s about how do we actually share more,” she said. “How do we do this all in a collaborative manner as opposed to the ethos of how the world is right now, pitting each other against one another.”
Featured image by Julia Midkiff/PitchBook News
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