California Venture Capital Diversity Reporting: What Firms Need to Prepare For in 2026
A new California regulation is creating reporting obligations for many venture capital firms — including firms located outside California.
The Fair Investment Practices by Venture Capital Companies (FIPVCC) law requires certain venture capital firms to collect demographic information about founders of portfolio companies and report aggregated statistics to the California Department of Financial Protection and Innovation (DFPI).
The rule is designed to improve transparency around investment patterns and support visibility into funding trends among diverse founding teams. Here are some important compliance timelines to be aware of.
Key Compliance Timelines
The first reporting cycle is occurring now with an annual report due in April of 2026 and updated reporting that’s due annually, thereafter.
For the current reporting cycle, VC firms must meet the requirement of registering with DFPI. For April’s reporting cycle, firms must deliver their first annual report, covering 2025 investments. After the current reporting cycle and April’s reporting cycle, firms need to submit updated reports annually.
Who Is Covered
The law applies to venture capital companies with a “California nexus.” This can include:
- Venture capital funds
- Co-investment vehicles
- SPVs and venture investment structures
- Family offices
- Funds outside California that invest in companies or solicit investors in California
Many firms are surprised that physical presence in California is not required to trigger the rule.
What Data Must Be Collected
For each investment made during the reporting year, firms must distribute a voluntary demographic survey to the founding team members of the portfolio company. The survey collects optional information such as gender identity, race and ethnicity, LGBTQ+ identification, disability status, veteran status, and California residency.
Firms must then report aggregated and anonymized data to DFPI, including total investments made, percentage and amount invested in companies founded by diverse founders, and demographic distributions of founders responding to the survey. The resulting reports will be publicly accessible on the DFPI website.
The Practical Compliance Challenge
While the reporting requirement itself is relatively straightforward, the operational implementation can be challenging. Firms must establish a process to:
- Identify qualifying investments each year
- Send surveys to founders after investments close
- Track voluntary responses
- Maintain privacy protections
- Aggregate and anonymize results
- Generate DFPI-compatible reports
Preparing for Future Reporting Cycles
Beyond the first filing, firms should integrate the process into their investment operations and compliance processes, including:
- Adding the survey to deal closing workflows
- Tracking founder demographics in a secure system
- Maintaining records for regulatory review
- Automating annual reporting preparation
How We Help
We are assisting venture capital firms with implementing practical reporting infrastructure, including:
- Survey and data-collection systems
- Secure demographic data storage and anonymization
- Automated reporting preparation
- Compliance documentation and workflows
The goal is to create a simple, repeatable process that minimizes operational overhead while meeting DFPI requirements.
If your firm expects to be subject to the reporting requirement, it is advisable to begin establishing your data-collection workflow before the next reporting cycle.
Need help reviewing these compliance reporting tasks and processes?