California Passes Bill That Requires VC Firms To Report On Their Number Of Investments In Diverse Founders

A step has been taken toward more transparency in the VC space.

On Oct. 8, 2023, California Governor Gavin Newsom signed Senate Bill 54, a law that mandates VC firms to release annual reports regarding the number of diverse founders they’re investing in — making it the inaugural law focused on increasing diversity in VC funding in the U.S. — TechCrunch reports.

“This bill resonates deeply with my commitment to advance equity and provide for greater economic empowerment of historically underrepresented communities,” Gov. Newsom wrote in a letter as he signed the bill, per the outlet.

In addition to providing information related to race, VC firms operating in California must report on disability status and sexual orientation of the individuals they provide funds to, the outlet details. The data from the reports will be available to the public.

“With Governor Newsom’s signing of SB 54, California is extending its nation-leading efforts to expand equity by bringing transparency to venture capital investment decisions with the goal of helping more women- and minority-owned startups access the VC lifeline upon which entrepreneurs depend,” said Sen. Nancy Skinner, who sponsored the bill.

For the full report, click here.