California’s new diversity reporting standards: What VCs need to know

UPDATE: On March 17, 2026, the California Department of Financial Protection and Innovation (DFPI) announced it suspended implementation and enforcement of the Fair Investment Practices by Venture Capital Companies Law (FIPVCC). Venture capital firms will not be required to submit registrations or provide demographic survey reports as required by the law.

DFPI plans to initiate rulemaking and will seek additional input from VCs, industry associations, founders, and investors before the formal process begins later this year in an effort to provide better clarity, collaboration, and transparency around compliance with the requirements of the law.

Carta will be tracking these developments. You can subscribe to updates and find additional relevant information here.

Beginning in 2026, California’s new VC diversity reporting requirements will take effect, imposing significant new compliance obligations for venture capital firms that have any nexus to California. In anticipation of the upcoming reporting mandates, the California Department of Financial Protection and Innovation (DFPI) has launched a new website providing initial guidance on the upcoming requirements for VC firms, signaling that compliance timelines remain on track.

Background and key dates

In 2023, California enacted legislation aimed at increasing transparency around diversity in the venture capital industry. The law, known as the Fair Investment Practices by Venture Capital Companies Law (FIPVCC), was passed in 2023 under SB 54 and later amended by SB 164 in 2024. Under the law, VC firms with a California nexus are required to report to the state on the diversity composition of the founding teams in which they invest.

• Initial registration (March 1, 2026): Covered VC firms must register with DFPI by submitting identification information, including firm name and designated point of contact details. 

• Annual reporting (April 1, 2026): VC firms must submit their first demographic report by April 1, 2026, which covers investments made in the prior calendar year (2025). Reports are due on an annual basis thereafter.

The registration and reporting portal is not yet active, though the website signals it is “coming soon.”

Reporting requirements

Under the requirements, VC firms with a California nexus will be required to collect and annually report aggregated, anonymized demographic data on founding team members of portfolio companies in which they invest. Required disclosures include:

• Founding team demographic information: Information regarding diversity, including the gender identity, race, ethnicity, sexual orientation, disability status, veteran status, and California residency for each founding team member

• Diversity investment metrics: Total investment amounts made to businesses primarily founded by diverse founding teams as a percentage of total VC investments made, both in the aggregate and broken down by demographic categories

• Investment information: Total VC investments in each business during the prior calendar year and principal place of business of each company in which the firm made an investment over the previous year

DFPI has posted a standardized survey form for fund managers to distribute to founding teams to collect information required under the law. Founder participation is voluntary, but firms must document outreach efforts and responses. 

Firms must submit the demographic survey data on the report issued by DFPI, though the reporting portal is not yet live. The DFPI is required to make annual reports publicly available in an easily searchable and downloadable format on its website.

Who must register?

The FIPVCC defines “Covered Entities” broadly. Entities must register if they meet each of the three following criteria:

1. Meets the definition of a "venture capital company,” which  includes:

   • Entities that invest at least 50% of their assets in venture capital investments;

   • Entities that are venture capital funds under the Investment Advisers Act; or

   • Entities that are venture capital operating companies, as defined by ERISA.

2.  Primarily invests in startup, early-stage, or emerging growth companies

3.  Has a California connection through at least one of these factors:

   • Headquartered in California

   • Has a significant presence or operational office in California

   • Invests in businesses located in or with significant operations in California

   • Solicits or receives investments from California residents

In practice, this means most VC funds will be subject to these requirements and need to comply. 

For detailed eligibility guidance and self-assessment tools, visit the DFPI's “Who Must Register and Report” page.

Penalties and noncompliance

If a covered VC firm fails to comply with reporting obligations, DFPI is required to provide notice and permit a 60-day cure period to submit the report without penalty. If noncompliance continues, firms could face penalties of up to $5,000 per day, with increased penalties for reckless or knowing violations.

Annual reports (due each April 1) will be posted publicly on the DFPI website.

Key dates timeline

Why it matters

California’s VC diversity reporting law will impose significant new compliance obligations on venture capital firms at a time when federal policy has shifted in the opposite direction. Legal challenges still remain possible, as similar state diversity initiatives have faced constitutional scrutiny. However, at present, these requirements are coming for virtually all VC fund managers.

Notably, the law requires DFPI to publish each report on its website, meaning investment information that is not currently public will soon become accessible. This transparency mandate represents a significant shift in disclosure practices for the venture capital industry.

Firms should consider assessing portfolio company communications, data collection workflows, privacy controls, and compliance processes to begin preparing reports for submission. Carta will continue to provide updates as DFPI releases additional information.

Important links

• Law: Corporations Code section 27500 et seq.

• Who must register and report: Eligibility Guidance

• Survey (PDF): VCC Demographic Data Survey

• Report (PDF): VCC Report Template

• For questions: vcc@dfpi.ca.gov

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