California Broad Venture Capital Diversity Reporting Law Amended and Now in Effect
California’s venture capital diversity reporting law is going through some changes. Initially set to take effect on March 1, 2025, the deadline has been pushed back to March 1, 2026, giving firms more time to prepare. The Department of Financial Protection and Innovation (DFPI) will now oversee the implementation of the law, instead of the Civil Rights Department.
The law applies to venture capital firms that meet specific criteria, such as investing in startup or early-stage companies and having ties to California. It’s a broad definition that may impact firms not based in California but with connections to the state. The goal is to increase transparency and promote diversity in the industry.
Covered entities will need to collect data on the diversity of the founding teams of the companies they invest in, starting in 2025. This data will be reported annually to the DFPI, with the first reports due by April 1, 2026. In addition, founding team members will be asked to complete a standardized demographic survey after receiving an investment. Participation is voluntary, and the data will be reported in aggregate to protect the privacy of individuals.
While these requirements may seem daunting, they are aimed at creating a more equitable and diverse venture capital landscape. With these changes, California is taking a proactive approach to promoting fairness and transparency in the industry.
