Who Should Report

The Fair Investment Practices by Venture Capital Companies Law (FIPVCC), enacted by SB 54 (Stats. 2023, ch. 594) and amended by SB 164 (Stats. 2024, ch. 41), is codified under Corporations Code section 27500 et seq.

• Commencing March 1, 2026, a venture capital company that is in the business of venture capital investment and has a nexus to California as defined by the FIPVCC is a “Covered Entity” that must submit contact information to the DFPI.
• A Covered Entity must use the DFPI-developed, voluntary Survey to collect anonymized demographic information from the founding team members of businesses the Covered Entity invested in during the prior calendar year.
• By April 1, 2026 and annually thereafter, a Covered Entity must submit a Report to the DFPI with aggregated, anonymized data of demographic information voluntarily provided by founding team members through the Surveys returned to the Covered Entity. Each report submitted by a Covered Entity will be posted to the DFPI website.

Who Must Register as a Covered Entity?

To determine if a venture capital company must register under the FIPVCC, an entity should assess whether it meets the definition of “Covered Entity.”

Step 1:  Does entity meet the definition of “venture capital company” in the FIPVCC?

Corporations Code section 27500(g): The FIPVCC defines venture capital company the same as California Code of Regulations, title 10, section 260.204.9, subdivision (a)(4):

(4) “Venture capital company” means an entity that satisfies one or more of the conditions below:

(A) on at least one occasion during the annual period commencing with the date of its initial capitalization, and on at least one occasion during each annual period thereafter, at least fifty percent (50%) of its assets (other than short-term investments pending long-term commitment or distribution to investors), valued at cost, are venture capital investments, as defined in subsection (a)(5) of this rule, or derivative investments, as defined in subsection (a)(6) of this rule; or

(B) the entity is a “venture capital fund” as defined in rule 203(l)-1 adopted by the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended (17 C.F.R. 275.203(l)-(1)); or

(C) the entity is a “venture capital operating company” as defined in rule 2510.3-101(d) adopted by the U.S. Department of Labor under the Employee Retirement Income Security Act of 1974 (29 C.F.R. § 2510.3-101(d)).

If the entity does not meet (A), (B) or (C) above, then the entity is not a Covered Entity and registration is not required.

OR

If the entity meets one or more of (A), (B) or (C ) above, then proceed to Step 2.

Step 2:
Does the venture capital company meet both of the following criteria:

1. primarily engages in the “business of investing in, or providing financing to, startup, early-stage, or emerging growth companies,” and
2. meets a nexus to California under the FIPVCC provisions?

Step 2a: Does the venture capital company primarily engage in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies?

Corporations Code section 27500(b)(1): The venture capital company primarily engages in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies.

If the answer to this question is yes, then proceed to Step 2b.

OR

If the answer to this question is no, then the venture capital company is not a Covered Entity and registration is not required.

Step 2b: Does the venture capital company have a nexus to California under the FIPVCC?

Corporations Code section 27500(b)(2): The venture capital company meets any of the following criteria:

(A) The venture capital company is headquartered in California.

(B) The venture capital company has a significant presence or operational office in California.

(C) The venture capital company makes venture capital investments in businesses that are located in, or have significant operations in, California.

(D) The venture capital company solicits or receives investments from a person who is a resident of California.

If the venture capital company does not meet any of (A) through (D) above, then the venture capital company is not a Covered Entity and registration is not required.

OR

If the venture capital company meets at least one of the criteria in (A) through (D) above, then the venture capital company meets the definition of Covered Entity and must register with the DFPI under the FIPVCC.