People walk in front of a screen at the World Internet Conference in Wuzhen, Zhejiang province, China.
Most of San Mateo County hasn’t gained much traction in the Bay Area’s burgeoning artificial intelligence boom, widening an existing chasm between the county and startup hotbeds like San Francisco and Palo Alto.
Jeremiah Owyang, an investor and partner at Blitzscaling Ventures, said AI presence in the county, perhaps apart from Menlo Park, is pretty light and doesn’t seem to be growing much, concentrated largely in San Francisco and Palo Alto.
“It’s very quiet … and I don’t see it changing any time soon,” he said.
According to Crunchbase data, the number of new startups between 2023 and 2024 dropped in San Francisco and other parts of the Bay Area — and especially in San Mateo County, going from about 100 in 2023 to 35 in 2024. Palo Alto alone saw nearly 60 in 2024.
Peter Walker, head of insights at Carta, cautioned that it’s hard to quantify the exact number of new startups, in part due to the growing popularity of Simple Agreements for Future Equity — known as SAFEs — which make investment reporting more obscure. Still, Carta data shows the number of seed rounds has remained relatively flat since 2022, though the total amount of cash invested is still growing, largely going toward AI-focused companies.
“I do think that some of what's happened lately is there are a lot of companies starting to bootstrap to begin with and not raise venture capital at the beginning,” Walker said. “Especially here in the Bay Area, it used to be a pretty well-subscribed notion that if you can raise from venture firms you probably should … now I think there is more questioning of that thinking in the founder community.”
The county retains a strong technology and life science presence, and as those companies invest more in AI, they will likely bring in more AI-focused employees. According to data from LinkUp and the University of Maryland, the county had a similar rate of growth in the total number of AI jobs from 2023 to 2024 as San Francisco.
But the county was never really considered the Bay Area’s hotbed for new startups, and the AI boom seems to solidify that.
“No investor is going to be impressed that your startup is headquartered in Belmont or Millbrae. It just doesn’t have brand cache in the tech world,” Owyang said.
As startups grow, the county has long been able to take advantage of their desire for suburban benefits geared toward more career-established employees, but Owyang said that is not likely to happen as much for AI companies.
“Even when [the companies] get bigger, the rent is still so cheap in San Francisco because of vacancy rates so they are not even moving down to the Peninsula much as they grow,” Owyang said.
Erica Wood, CEO of the San Mateo Area Chamber of Commerce, said both the chamber and cities like San Mateo are in the midst of creating an economic development plan that can hopefully attract more startups.
“We are in the early phase of that work to gather and figure out, are there certain types of incentives? Are there certain types of available space available? How can we create the resources needed?” she said.
Adjusting the economic expectations of new startups is also tricky. While it’s evident how San Mateo’s downtown businesses benefit from a company like Verkada located nearby, AI startups require less full-time employees, even compared to early-stage startups of the past. In 2023, a medium-sized Series A company had about 18 full-time employees on average, down from 20 in 2021 — and last year in 2024, the average was about 13, according to Carta data.
Owyang said AI startups tend to require fewer employees, and they’re also more likely to be fully virtual in their initial years, which isn’t necessarily helpful for the commercial market.
With the growth of downtown San Mateo and the recent passage of Measure T — which raised building height and density limits in certain areas especially near Caltrain stations — Wood said the city has a lot of assets it hopes to tap into.
“There is benefit to being proximate to sources of capital and that really matters to sources of capital,” she said. “There is an ecosystem there that is conducive to startups, but that's not to say that San Mateo County can’t be a place for startups.”
(650) 344-5200 ext. 103
(650) 344-5200 ext. 102
Daily Journal staff
{{description}}
Email notifications are only sent once a day, and only if there are new matching items.
Please purchase a Premium Subscription to continue reading.
To continue, please log in, or sign up for a new account.
We offer one free story view per month. If you register for an account, you will get two additional story views. After those three total views, we ask that you support us with a subscription.
A subscription to our digital content is so much more than just access to our valuable content. It means you’re helping to support a local community institution that has, from its very start, supported the betterment of our society. Thank you very much!
Only subscribers can view and post comments on articles.
Already a subscriber? Login Here
What the Constitution Means to Me Read moreWhat The Constitution Means To Me
The local FOUR CHAPLAINS CEREMONY commemorates the bravery, heroism and sacrifice of the fou… Read moreJan 31, 2026 FOUR CHAPLAINS CEREMONY
You’ve likely known your closest friends for years — but when was the last time you met some… Read moreMaking Friends in Your 60s and Beyond
Dirk van Ulden said:
Success! An email has been sent to with a link to confirm list signup.
Error! There was an error processing your request.
Sorry, an error occurred.
Already Subscribed!
Cancel anytime
Thank you .
Your account has been registered, and you are now logged in.
Check your email for details.
Submitting this form below will send a message to your email with a link to change your password.
An email message containing instructions on how to reset your password has been sent to the email address listed on your account.
No promotional rates found.
Secure & Encrypted
Thank you.
Your gift purchase was successful! Your purchase was successful, and you are now logged in.
| Rate: | |
| Begins: | |
| Transaction ID: |
A receipt was sent to your email.
(1) comment
C/CAG has still not decided if San Mateo wants to keep being a bedroom community to San Francisco, Palo Alto, and San Jose or create “Livable Communities” attractive so residents stay and work in town.
Actually, I take that back, San Mateo County has absolutely decided they want to be just a bedroom community to the big guys. These projects prove as much:
spending billions of dollars on highway-widenings of US-101 and I-280
Spending even more on a variety of highway intersections
Improvement of service on Caltrain (regional transportation)
Reduction of service at SamTrans (local transportation)
Hardly any investment on local, liveable communities.
Still no bike lane network in the county
Compare that to the three cities mentioned in the article all have projects to improve transportation around their cities:
SF has Muni, Bart, Caltrian streetcars, and bike lanes
Palo Alto has VTA, Stanford Shuttles, Caltrain, and bike lanes
Menlo Park is buying into the “Livable Community” idea
The rest of the county has an unhealthy fascination with car-centric development. Oh and San Mateo and Redwood City have segregated their schools on purpose - That is not exactly regarded as a good sign of sound leadership running your county. These are signs that corruption runs high here and you have to pay your way through the politics of your town. New startup companies don’t like that.
If you want to attract young, new companies you need to have cheap office space in downtowns, solid restaurants, good shops, great schools and investment in various options of transportation. … basically what’s called “Liveable Communities”.
San Mateo City council members Nicole Fernandez and Danielle Cwirko-Godycki are more concerned about getting weed shops into downtown than having safe-routes-to-school or livable communities. Now those are some messed up priorities for city leadership. You are not attracting smart companies into the same downtown with that kind of attitude.
Welcome to the discussion.
Log In
Keep the discussion civilized. Absolutely NO personal attacks or insults directed toward writers, nor others who make comments.
Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't threaten. Threats of harming another person will not be tolerated.
Be truthful. Don't knowingly lie about anyone or anything.
Be proactive. Use the 'Report' link on each comment to let us know of abusive posts.
PLEASE TURN OFF YOUR CAPS LOCK.
Anyone violating these rules will be issued a warning. After the warning, comment privileges can be revoked.