California's New Venture Capital Reporting Requirements

03.02.2026

By Jack Bowling, Jennifer Cooke-Yin, Cooper Hilton, Alexander Kaplan & Michael Wippler

Beginning March 1, 2026, California's Fair Investment Practices by Venture Capital Companies Law (FIPVCC) imposed new registration and reporting obligations on venture capital companies with a California nexus. The FIPVCC is codified in Cal. Corp. Code §§ 27500-27506.

Covered Entities

The FIPVCC applies to "covered entities," defined as venture capital companies that (1) primarily engage in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies and (2) have a California nexus.

Under California regulations, a "venture capital company" is an entity that satisfies at least one of the following:

1. At least 50% of its assets (valued at cost, excluding short-term holdings) are venture capital investments or derivative investments.
2. The entity is a "venture capital fund" under the Investment Advisers Act of 1940.
3. The entity is a "venture capital operating company" under the Employee Retirement Income Security Act of 1974.

A "venture capital investment" is an acquisition of securities in an operating company as to which the investor has or obtains management rights. "Management rights" means the right, obtained contractually or through ownership of securities, either through one person alone or in conjunction with one or more persons acting together or through an affiliated person, to substantially participate in, to substantially influence the conduct of, or to provide (or to offer to provide) significant guidance and counsel concerning the management, operations or business objectives of the operating company in which the venture capital investment is made.

A venture capital company has a California nexus if the venture capital company meets any of the following criteria:

1. The company is headquartered in California.
2. The company has a significant presence or operational office in California.
3. The company makes venture capital investments in businesses that are located in or have significant operations in
4. The company solicits or receives investments from a person who is a resident of California.

Deadlines for Compliance

Starting March 1, 2026, each covered entity must submit to the California Department of Financial Protection and Innovation (DFPI) (1) the name of the covered entity, (2) a designated point of contact with that person's name, title, and email address, and (3) the covered entity's email address, telephone number, and physical address.

By April 1, 2026 (and annually thereafter), each covered entity must submit an annual report to the DFPI containing demographic information for the founding teams of the businesses in which the covered entity made a venture capital investment and investment data for the prior calendar year.

Annual Reporting Requirements

The annual report must include the following information:

• Demographic Information (Aggregated): covered entities must report aggregated demographic information for founding team members of all the businesses in which the covered entity made a venture capital investment in the prior calendar year. A founding team member is the CEO of the company, the president of the company, or a person who satisfies the following conditions: (1) the person owned initial shares or similar ownership interests of the business, (2) the person contributed to the concept of, research for, development of, or work performed by the business before initial shares were issued, and (3) the person was not a passive investor in the business. The required information includes gender identity, race, ethnicity, disability status, LGBTQ+ identification, veteran status, California residency, and whether any founder declined to respond.
• Diverse Founder Investment Metrics: the report must disclose the number of investments made in businesses "primarily founded by diverse founding team members" as a percentage of total investments, in the aggregate and broken down by demographic category. A business is primarily founded by diverse founding team members if more than one-half of the founding team members responded to the survey described below and at least one-half of the founding team members are diverse founding team members. A diverse founding team member is a founding team member 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. The report must also include the total amount of investments in such businesses, expressed as a percentage of the covered entity's total venture capital investments.
• Investment-Level Information: for each portfolio company that received investment, the report must include (1) the total amount invested during the prior calendar year and (2) the company's principal place of business.

Survey and Disclosure Requirements

Covered entities must collect founder demographic information through a standardized survey form specified by the DFPI. The survey may only be distributed after the investment agreement has been executed and initial funds have been transferred.

Before or concurrently with providing the survey, covered entities must provide founders with a written disclosure stating that participation is voluntary, that declining to participate will not result in adverse consequences, and that only aggregated, anonymized data will be reported.

Covered entities must collect and report survey responses in a manner that does not associate any response with an individual founding team member.

Fees, Penalties, and Recordkeeping

The DFPI will charge a fee of at least $175 per report.

If a covered entity fails to file its annual report by April 1, the DFPI must provide notice and allow a 60-day cure period. If noncompliance continues after this period, civil penalties may reach up to $5,000 per day for each day of violation, with increased penalties for reckless or knowing violations.

Covered entities must maintain records related to their reporting obligations and preserve records related to each report for at least five years after submission.

The DFPI will make all submitted reports publicly accessible, searchable, and downloadable on its website. The DFPI may also use any information collected pursuant to the FIPVCC in furtherance of its statutory duties, including, but not limited to, using the information in a civil action brought by the department under the FIPVCC or other law.

Investigative Authority of DFPI

The Commissioner of the DFPI may conduct public or private investigations within or outside California to determine whether a covered entity has violated, or is about to violate, any provision of the FIPVCC or any rule or order issued thereunder.

The Commissioner may also publish information concerning any such violations.  

Key Takeaways

• The FIPVCC's California nexus standard is broad. It captures not only California-headquartered companies but also any venture capital company that invests in California-based startups or accepts capital from California investors.
• The DFPI has not yet issued guidance clarifying key terms such as "significant presence," "operational office," or "significant operations." Additionally, the statute's use of present-tense language ("makes," "solicits or receives") leaves open the question of whether a fund that previously had California contacts but does not in the current reporting year remains a covered entity.
• Registration with the DFPI began March 1, 2026, and the first annual report is due April 1, 2026.
• Covered entities must distribute a standardized demographic survey to founders only after closing and fund transfer, accompanied by specific written disclosures.
• All demographic data must be collected and reported in aggregated, anonymized form to protect founder privacy.
• Non-compliance can result in civil penalties of up to $5,000 per day, with enhanced penalties for knowing or reckless violations.
• The DFPI has broad authority to investigate potential violations before they occur – both within and outside California – and to publish enforcement findings, indicating the FIPVCC will be actively enforced and not merely a passive reporting regime.
• A covered entity's compliance is not contingent on obtaining survey responses from all founder teams. Because survey participation is voluntary, reports with limited demographic data may still satisfy the FIPVCC's requirements.  
• The definition of "venture capital investment" turns on whether the investor holds management rights, a broad standard that could sweep in investment types not traditionally considered venture capital. Unsuspecting entities, such as growth equity funds, corporate venture arms, and family offices, may therefore be covered entities under the FIPVCC.
• DFPI's reporting portal can be found here.

For more information on compliance with the California FIPVCC, please contact Jack Bowling, Jennifer Cooke-Yin, Cooper Hilton, Alexander Kaplan, Michael Wippler or the Stinson LLP contact with whom you regularly work.