California’s New Reporting Requirements for Venture Capital Companies

California’s Fair Investment Practices by Venture Capital Companies Law (the “Act”), which is intended to promote funding transparency in the VC industry, will take effect on March 1, 2026. The Act requires venture capital (“VC”) companies with a California business nexus to request demographic data from the founding team members of the businesses receiving investment or financing from the VC. Annual reports that aggregate the collected data are required to be submitted to the California Department of Financial Protection and Innovation (“DFPI”) and will be published on the DFPI website.

Key Takeaways and Effective Dates

The Act has broad applicability. All venture capital companies that primarily engage in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies, and that:

• have at least one investor resident in California, or
• invest in businesses located in or that have significant operations in California

are likely covered by the Act even if the VC itself does not have a physical presence or significant operations in California.

Commencing March 1, 2026, each covered entity must register with the DFPI. On an annual basis, a covered entity must provide a voluntary survey to each founding team member of each business that the covered entity invested in during the prior calendar year. The purpose of the survey is for the VC to gather anonymized demographic information.

By April 1, 2026 (and annually thereafter), a covered entity must aggregate the demographic information voluntarily returned by founding team members in the surveys and submit the anonymized data and other statutorily-required information in a report to the DFPI.

After the April 1, 2026 deadline, DPFI will notify non-compliant entities and permit a 60-day cure period. Failure to comply after this period may result in civil or administrative penalties, including fines of up to $5,000 per day of noncompliance and/or injunctive relief.

DFPI Website

The DFPI has launched a Venture Capital Reporting Program webpage, to facilitate compliance with the Act. The website includes initial guidance on the registration and reporting framework, including forms of the required survey and report.

What Should VC Companies Do Now?

As the March 1 registration deadline approaches, VC companies should determine whether they are covered entities under the Act, and prepare internal processes for collecting, anonymizing, and aggregating survey data from applicable portfolio companies for the report preparation. 

Brown Rudnick is monitoring developments. We are available to assist VC companies in determining whether they are covered by the Act and advising on compliance with the Act.