California’s Fresh Venture Capital Diversity Reporting Law: A 2026 Compliance Guide

California is poised to reshape venture capital (VC) transparency with a new law requiring diversity reporting. The Fair Investment Practices by Venture Capital Companies (FIPVCC) law, enacted as Senate Bill 54 and amended by Senate Bill 164, mandates that certain VC firms collect and report demographic data about the founding teams of their portfolio companies. This article provides a comprehensive overview of the law, its requirements, and the key deadlines for compliance in 2026.

Key Compliance Requirements and Deadlines

The FIPVCC aims to increase transparency in the VC industry and promote diversity in startup funding. Here’s a breakdown of the essential compliance steps:

• Registration Deadline: Covered entities must register with the California Department of Financial Protection and Innovation (DFPI) by March 1, 2026.
• First Annual Report Deadline: The first annual reports, covering investments made in 2025, are due to the DFPI by April 1, 2026.

Who is a “Covered Entity”?

The definition of “covered entity” is broad. It applies to firms with a “California nexus,” which includes those:

• Investing in California-based portfolio companies.
• Receiving investments from California entities or residents.
• Funds based outside of California may also be subject to the law.

Registration Process

Covered entities must register with the DFPI through the VCC Registration Portal (expected to be open before March 1, 2026) and submit the following information:

• Name of the covered entity.
• Name, title, and email address of the designated point of contact.
• Designated email address, telephone number, physical address, and internet website.

Timely updates to this information are required, with a 60-day grace period to correct any omissions or errors without penalty.

Annual Reporting Requirements

The annual report process involves two key steps:

1. Demographic Data Survey: Covered entities must distribute a standardized demographic survey (available on the DFPI landing page) to each founding team member of portfolio companies.
2. Report Compilation: Compile the survey data into an aggregated and anonymized report for submission to the DFPI.

Defining a “Founding Team Member”

The law defines a “founding team member” as someone who:

• Is designated as the chief executive officer or president, or
• Meets all of the following conditions:
  • Owned initial shares or similar ownership interests.
  • Contributed to the concept, research, development, or perform performed by the business before shares were issued.
  • Was not a passive investor.

Data Points to Collect

The demographic data required in the survey includes:

• Gender identity (including nonbinary and gender-fluid identities).
• Race.
• Ethnicity.
• Disability status.
• LGBTQ+ identification.
• Veteran or disabled veteran status.
• California residency.
• Whether a team member declined to provide information.

Participation in the survey is voluntary, and covered entities are prohibited from incentivizing or influencing responses.

Report Content

The annual report must include the following information, aggregated and anonymized:

• Each demographic category, reported at an aggregated level.
• The number of VC investments to businesses primarily founded by diverse founding team members, as a percentage of total investments.
• The total amount of VC investments to businesses primarily founded by diverse founding team members, as a percentage of total investments.
• The total amount of money invested in each business.
• The principal place of business of each company.

A “diverse founding team member” is defined as someone who self-identifies as a woman, nonbinary, Black, African American, Hispanic, Latino-Latina, Asian, Pacific Islander, Native American, Native Hawaiian, Alaskan Native, disabled, veteran or disabled veteran, lesbian, gay, bisexual, transgender, or queer.

Additional Requirements and Penalties

• Record Keeping: Covered entities must retain all records related to the reports for at least five years.
• Fees: A $175 fee is required per report, subject to adjustment by the DFPI.
• Privacy Considerations: The collection of this data may trigger privacy compliance obligations under various laws.

Violations of the FIPVCC can result in penalties, including cease and desist orders, investigative costs, and monetary penalties of up to $5,000 per day of non-compliance (potentially higher for reckless or knowing violations).

Resources and Further Information

The DFPI provides additional information and resources on its VCC Reporting Program landing page.