California Halts VC Diversity Reporting Amid Backlash
California halts VC diversity reporting enforcement due to industry pushback.
Why it matters: General Counsels should prepare by reviewing current diversity policies, assessing data collection capabilities, and advising on potential compliance strategies when enforcement resumes.
- California DFPI suspended enforcement on March 17, 2026.
- April 1, 2026, reporting deadline for diversity data will not be enforced.
- DFPI to start stakeholder-inclusive rulemaking in 2026.
- Potential fines for non-compliance could reach $5,000 per day.
The California Department of Financial Protection and Innovation (DFPI) announced on March 17, 2026, the suspension of enforcement for the Fair Investment Practices by Venture Capital Companies law (FIPVCC). This pause follows pushback from venture capital firms and will delay the mandatory demographic data reporting initially slated for April 1, 2026.
The FIPVCC, passed as SB 54 in October 2023 and amended by SB 164 in June 2024, mandated VC firms to submit anonymized data on key demographics, such as gender, race, and disability status. These requirements aimed to boost transparency in the industry but are now on hold without enforcement of the April deadline.
The suspension arises amidst calls for a more consultative approach. The DFPI plans to engage stakeholders, including venture capitalists and founders, through a comprehensive rulemaking process geared at refining the regulations. This process is expected to reshape compliance expectations significantly over the coming year.
Currently, non-compliance under the suspended regulations could have led to potential fines of up to $5,000 per day, according to Morgan Lewis. This highlights the importance for General Counsels to continue preparing by evaluating their firm's diversity data strategies and ensuring readiness for when enforcement may resume.
Yes, but: The suspension does not remove the eventual requirement for VC firms to comply with diversity reporting once regulations are finalized.
What's next: The DFPI will conduct stakeholder-inclusive rulemaking within a year, potentially altering compliance requirements.