‘We have a bias problem’: California bill addresses race and gender in venture capital funding

California would become the first state to require venture capital firms to disclose the race and gender of the founders of the companies they fund, under a bill currently awaiting Governor Gavin Newsom’s signature.

The business community strongly opposes the legislation, characterizing it as an example of bureaucratic overreach. But civil rights groups and female entrepreneurs say it could go a long way toward equalizing opportunity in Silicon Valley, where startup capital overwhelmingly flows to white men. According to the business data firm PitchBook, companies founded by all-female teams accounted for just 2% of venture capital funding last year. Those led by Black women and Latinas received even less, 0.85%, according to a report from Project Diane, a research effort focused on female founders.

“This is a chance for us, for the industry to look itself in the mirror – to finally, wholeheartedly internalize that we have a bias problem,” said Marquesa Finch, a founding partner of the F5 Collective, a fund that exclusively backs female founders.

Finch, who helped draft the bill for Nancy Skinner, a Democratic state senator, is a fintech founder and a venture capitalist with a decade of experience.

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