California’s Fair Investment Practices by Venture Capital Companies Law aims to promote transparency in venture funding by requiring certain VC firms with ties to the state to collect and report demographic data on portfolio company founders. However, its broad reach has sparked debate over its scope and potential burdens on out-of-state entities, such as those in Dallas.
The California legislature passed S.B. 54 in 2023, then amended it with S.B. 164 in 2024.
Initially, legislators promised the law would ensure “Fair Investment Practices by Venture Capital Companies” by forcing them to collect surveys on investment recipients’ race, disability, sex, sexual orientation, and gender identity. But lawmakers kept the language vague enough to collect diversity checklists from venture capital firms across America, including in Dallas.
The survey requires venture firms to collect data on gender, including “nonbinary” and “transgender,” race and ethnicity, “LGBTQ+,” disability, veteran status, and California residency.
The law focuses on transparency via voluntary founder surveys, and reporting is anonymized/aggregated to protect privacy. Deadlines are for 2026 compliance (registration: March 1; first reports: April 1 for 2025 investments).
Even if a venture firm is not based in California, bureaucrats would require it to collect these surveys if it has a “significant presence or operational office” in the state, if it “makes venture capital investments” in businesses with state ties, or if it “solicits or receives investments from a person who is a resident of California.”
Many firms have called out the law for its “broad language.”
Venture firms subject to the law must register with the California Department of Financial Protection and Innovation by March 1 and report the data by April 1, or face a potential fine of up to $5,000 per day, according to Pillsbury Law.
Isaac Willour, director of corporate engagement at consulting firm Bowyer Research, told The Dallas Express he feels California is behind the times.
“As massive companies such as Goldman Sachs take active steps away from DEI criteria, California is still trying to shoehorn the race politics of 2023 into the business world of 2026,” Willour said.
After President Donald Trump took office and signed several executive orders against alleged DEI-based discrimination, major corporations across America rolled back so-called “diversity” initiatives, according to Forbes. These companies included Disney, McDonald’s, Meta, Walmart, and more.
Fort Worth considered cutting DEI in June 2025 to save federal funding, as The Dallas Express reported. Dallas began shifting to race- and gender-neutral standards to comply with federal law in December 2025.
“Today, many of America’s biggest businesses are realizing that hyperfixation on race and gender is counterproductive to business,” Willour said.
“As is so often the case, California governance is several years behind the fiduciary curve,” Willour added.
