For a while now, there has been talk about the decline of San Francisco’s tech scene. Some reports have claimed that the heart of innovation had shifted elsewhere, and that the city’s dominance in the tech industry was no more. However, as I look into the numbers, I find myself disagreeing with this narrative.
In fact, San Francisco (SF) is back in full force, and the data shows that it never really lost its edge. Let’s dive into why SF continues to be the center of tech innovation and why those who predicted its downfall may have spoken too soon.

San Francisco: Still the Home of Engineers

First off, when you look at where tech engineers reside, the SF Bay Area remains the top destination. According to data, SF still boasts an impressive 49% of all big tech engineers and 27% of startup engineers. These numbers far surpass any other city, and while the pandemic may have slowed growth, it didn’t reverse it. SF’s share of AI employees is also at 35%, which speaks to the city’s leadership in this rapidly growing industry.
Though cities like Seattle and New York have made gains, they don’t come close to challenging SF’s stronghold. What’s most interesting is that after a brief dip post-2019, SF’s engineer population has started to grow again, particularly in AI-related roles. This shows that not only is SF holding its ground, but it’s also adapting to the latest trends in tech.

Y Combinator Startups and Early-Stage Funding: SF on Top

One of the most striking indicators of SF’s resilience is the growth in new startups, especially those coming out of Y Combinator. Historically, SF has been the place to be for early-stage companies, and this trend continues to grow stronger. Over half of the companies from the Winter 2023 Y Combinator batch are based in the Bay Area, the highest percentage since 2014.

This is largely fueled by the AI boom, which has brought renewed energy and investment into the region. In fact, 26% of all Seed and Series A funding rounds from top venture capital firms are going to SF-based startups. That’s more than any other city in the U.S.
Even as some founders left during the pandemic, we’re seeing a return. The allure of SF remains strong for entrepreneurs who want access to a deep talent pool and venture capital. While other cities are flourishing, the Bay Area continues to be the best place to build groundbreaking companies.

The AI Gold Rush

If there’s one area where SF is really shining, it’s artificial intelligence. SF’s dominance in AI funding is even more pronounced than in previous years. Over the last two years, the percentage of top venture capital rounds going to AI companies based in SF has surged to 38%.
This new AI gold rush has brought fresh momentum to the tech scene, attracting more engineers and entrepreneurs who want to be at the center of this emerging field. The sheer number of AI-related community events happening around the city is proof that SF is not just surviving—it’s thriving.

Challenges Are Real, but SF’s Future Is Bright

Of course, SF isn’t without its challenges. High costs of living, a challenging housing market, and issues with public services remain significant hurdles. Some parts of the city still struggle with safety and cleanliness, which have led some families and businesses to relocate.
Yet, for all its struggles, SF is unmatched in its density of tech talent, investors, and opportunities. This combination makes it the best place to build a tech company, especially in fast-growing sectors like AI.
As we move forward, it’s clear that the city is on an upward trajectory again, with AI fueling much of this growth. SF might have wavered briefly, but it never truly fell off the map, and its reign over the tech industry is not likely to end anytime soon.

Read the article: “Why the SF Bay Area Remains the Unchallenged Leader in AI Talent”