The Requirements From California Fair Investment Practices for Venture Capital Firms

California's Fair Investment Practices by Venture Capital Companies framework creates specific annual reporting duties for covered VC firms. This guide summarizes the core requirements teams need to operationalize.

1) Determine whether your firm is a covered entity

The law applies to venture capital companies that primarily invest in startups, early-stage, or emerging growth companies and meet one or more California nexus criteria, including operations, headquarters, investment footprint, or investor solicitation ties in California.

2) Submit annual reporting information

Covered firms must submit annual information to the DFPI, including contact details for the covered entity and designated reporting contact. Annual updates are required if this information changes.

3) File required funding determination data

By April 1 each year, covered entities must report prior-calendar-year funding determination information, including:

• Aggregate demographic data categories for founding teams.
• Number and percentage metrics related to investments in businesses primarily founded by diverse founding team members.
• Total amount invested in each business.
• Principal place of business for each business that received investment.

4) Use compliant survey mechanics

Survey collection must follow specific constraints:

• Use the standardized survey format specified by the department.
• Include a decline-to-state option for each survey question.
• Provide required written disclosure on voluntariness and non-retaliation.
• Delay survey delivery until after executed investment agreement and first transfer of funds.
• Avoid any encouragement, incentive, or influence regarding participation decisions.

5) Preserve anonymity in collection and reporting

The statute requires collection and reporting methods that do not associate survey response data with individual founders. In practice, many firms implement aggregate-only processing models to align with this requirement.

6) Maintain records and prepare for oversight

Records related to reports must be preserved for at least five years. The commissioner may examine records and request documentary materials or written responses to assess compliance.

7) Understand fee and enforcement structure

The department charges a filing fee (at least $175 per report, subject to adjustment). If filing deadlines are missed, there is a notice and cure process, followed by potential enforcement remedies for continued non-compliance.

Final takeaway

For venture capital firms, California Fair Investment Practices compliance is a recurring governance and operations obligation. Teams that codify requirements into systems and controls can file more reliably and reduce avoidable risk.

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This article is informational and does not constitute legal advice.

For a practical, privacy-first implementation path, visit the FIPVCC homepage.