Quick Questionnaire

Determine if your fund might need to report under California's new Diversity Reporting law

Beginning in 2026, venture capital firms, including funds and SPVs, that meet the covered-entity test and made at least one qualifying venture capital investment in the prior calendar year may need to register, conduct annual surveys, and complete annual filings before April 1.

Step 1: Venture capital company definition

Does this entity qualify as a venture capital company?

"Venture capital company" means an entity that satisfies one or more of the conditions below.

Answer yes if any one of these is true:

At least once in each annual period, 50% or more of assets (at cost) are venture capital or derivative investments (Cal. Code Regs. Tit. 10, § 260.204.9).
The entity is an SEC-defined "venture capital fund" (17 C.F.R. 275.203(l)-(1)).
The entity is a DOL-defined "venture capital operating company" (29 C.F.R. § 2510.3-101(d)).

Step 2: Covered Entity test

The venture capital company must satisfy Step 2a and at least one component of Step 2b.

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?

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

Is the venture capital company headquartered in California?

Is the fund's primary address for regulatory filings in California, or is it headquartered in California?

Does the venture capital company have significant presence or an operational office in California?

Does the fund have employees or an operational office in California?

Does the venture capital company invest in California companies?

Has the fund invested in any businesses that are located or have significant operations (employees, offices, etc.) in California?

Does the venture capital company solicit or receive investments from a person who is a resident of California?

Do you have California-based LPs in your fund or have you offered the investment to California residents?

Step 3: Annual Investment Filing Requirements

For the first filing cycle due April 1, 2026, current treatment turns on whether the entity made any qualifying venture capital investments in 2025.

Did any 2025 investments qualify as venture capital investments under California's definition?

If your entity made no investments at all in 2025, answer "no."

The California rule defines “venture capital investments” as investments directly into an operating company that are accompanied by management rights.

The “operating company” requirement means that investments into other non-operating fund vehicles would typically fall outside the definition.

Management rights are defined broadly, and California takes an expansive view of what can qualify. Under 10 CCR § 260.204.9(a)(7), those rights can arise through contract or securities ownership, and even "offering to provide" significant guidance or counsel can count.

So if a VC firm, or an affiliated person, is actively advising on strategy, introductions, or hiring decisions, that activity may satisfy the definition even without a formal board seat or a written management-rights clause.

Informational and directional only. Whether a specific investment qualifies is a fact-specific legal determination that should be confirmed with qualified legal counsel.