It’s just the second week of the year, and I’m already cheating.
My New Year’s resolutions are still going strong. That’s not what I mean.
I’m cheating because instead of showing you a chart this week, I’m going to share a map with you.
A map that shows where the future balance of power in business could be shifting.
New Centers of Economic Gravity
This week’s map is a ranking of cities and regions that are investing in artificial intelligence. It shows where AI companies captured more than 10% of all local venture capital funding in 2023 and 2024.
In a handful of places, that share is exceptionally high.
Beijing tops the list, with more than 66% of local VC funding going into AI. Silicon Valley is right behind it at over 62%. It’s one of three U.S. cities in the top ten.
But why does this matter?
Because it shows where economic gravity is forming right now. And more importantly, it represents where the future of business is being pulled toward.
When more than half of a region’s venture capital flows into a single technology, that technology becomes the default lens for building companies. Talent is recruited for it and infrastructure is designed to support it.
And that creates a self-reinforcing advantage for these AI capital hubs.
Companies operating inside them will iterate faster and experiment more cheaply. They’ll also gain earlier access to new models and workflows.
Over time, that should give those companies an edge on pricing and profits.
AI depends on compute, energy, data centers and specialized chips. In the months and years ahead, it will also increasingly rely on physical systems like robotics and automation.
Those things cluster, and they benefit from proximity. They also reward regions that commit capital at scale.
In that sense, it’s the geographic representation of Convergence X.
But the point of this chart isn’t just that a handful of cities are winning an AI investment race. It’s that AI has reached a point where capital concentrations will start to shape competition everywhere.
When a single technology absorbs a majority of funding, it resets productivity expectations across entire industries.
Companies operating near that concentration often gain the biggest advantages. Everyone else has to compete with those higher standards, whether they are in Beijing, Boise or Berlin.
At least, that’s how earlier technology shifts have played out.
The early internet certainly didn’t reward everyone equally. Cloud computing didn’t lift all companies at the same pace. And I’m convinced AI won’t be any different.
Except for the speed that it will happen.
Here’s My Take
This map points to where AI capital is concentrating right now.
It can also be read as a warning. Because we’ve seen this pattern before.
When steel and manufacturing began shifting away from large parts of the U.S., industrial production didn’t vanish overnight. Investment moved first as new plants were built elsewhere.
But the reason why so many Rust Belt cities haven’t fully recovered today is that productivity advantages accumulated over time, and the regions that failed to adapt found themselves competing against rivals with structurally lower costs.
At that point the gap was too hard to close.
AI creates a similar risk.
In regions where it captures only a small share of investment, companies will increasingly face competitors that can move faster, price more aggressively and operate with fewer people.
That pressure will lead to tighter margins and slower growth.
The important difference this time is that the outcome isn’t predetermined. Because unlike the decline of heavy manufacturing, AI isn’t tied to a single physical resource or industry. It’s a general-purpose tool that can be applied to manufacturing, logistics, healthcare, energy and services.
Regions that recognize this early still have room to adapt and redirect capital.
Today’s map shows where companies are gaining an early productivity edge.
But AI gives regions and companies a chance to upgrade productivity before competitive disadvantages become locked in.
Regards,
Ian KingChief Strategist, Banyan Hill Publishing
Editor’s Note: We’d love to hear from you!
If you want to share your thoughts or suggestions about the Daily Disruptor, or if there are any specific topics you’d like us to cover, just send an email to [email protected].
Don’t worry, we won’t reveal your full name in the event we publish a response. So feel free to comment away!
