California is ushering in a new era of transparency for the venture capital industry. On March 1, 2026, many venture capital firms with ties to the state were required to collect and report demographic data on the founders they fund under the Fair Investment Practices by Venture Capital Companies Act.
While the law is framed around diversity data collection, it introduces new compliance, operational, and investor relations considerations for venture capital firms that are best addressed well in advance of the first filing deadline which is closer than it may seem. Covered firms will be expected to submit their first annual demographic report on April 1, 2026.
For Suntera Fund Services’ venture capital clients, now is the time to understand what is changing and how to prepare.
What Firms Need to Know
One of the most notable aspects of California’s new framework is how broadly it may apply. The law covers venture capital companies that have a connection to California, such as being headquartered in the state, investing in California-based companies, or soliciting or receiving capital from California residents.
Once a firm is deemed a covered entity, the reporting requirement applies to all qualifying portfolio companies that received funding on or after January 1, 2025, not just those based in California. This means firms headquartered elsewhere, including those with only a portion of their portfolio or LP base tied to California, may still fall within scope.
Covered venture firms will be required to collect demographic information from the founding teams of portfolio companies, including gender identity, race and ethnicity, LGBTQ+ identification, disability status, veteran status, and California residency status. The data will be obtained through a survey and reported in aggregate to the California Department of Financial Protection and Innovation (DFPI).
Firms will also be required to report investment-level data, including the number and dollar value of investments made in companies primarily founded by diverse founders. The reporting is designed to be anonymized and aggregated, but firms will still need structured internal processes to collect, track, and consolidate this data accurately.
How VC Firms Can Prepare
For many venture capital managers, this will be the first time demographic data collection has been mandated by regulation. As a result, firms should be thinking about:
The Path Forward as the Law Takes Effect
At its core, this new requirement is a data management and reporting challenge layered on top of an already complex fund operations environment. Venture capital managers should consider how demographic data collection integrates with existing fund administration workflows, particularly around portfolio tracking, regulatory filings, and investor reporting.
For firms with any connection to the state, understanding whether (and how) the law applies is the first step. The next step is ensuring your operational framework is ready to support it.
For more information about this topic, please get in touch with Michael Von Bevern and Beth Mueller using the details below.
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Key Contacts:
Michael Von Bevern
GLOBAL HEAD OF FUNDS
View Bio | Email Michael | LinkedIn
Beth Mueller
MANAGING DIRECTOR, AMERICAS
View Bio | Email Beth | LinkedIn
