California’s Fair Investment Practices by Venture Capital Companies Law (FIPVCC) introduces a state-level registration and demographic reporting requirement for certain venture capital companies and related investment vehicles with a nexus to California.

This law represents a significant expansion of regulatory transparency obligations for private capital, and compliance deadlines are firm. Covered entities must register with the California Department of Financial Protection and Innovation (DFPI or the Department) by March 1, 2026, and must file their first demographic report by April 1, 2026, covering investments made during the 2025 calendar year.

Legal requirements and timing of compliance

Under the FIPVCC, covered entities must complete two distinct obligations on a recurring schedule. By March 1, 2026, each covered entity must register with DFPI and provide basic identifying information prescribed by the Department, including the entity’s legal name, business address, and designated point-of-contact information. As we write, DFPI is indicating that the portal for registration is not yet available (it is anticipated to go live February 25), and covered entities should be prepared to act promptly once it becomes operational.

Following registration, each covered entity must prepare and file an annual report by April 1, 2026, and by April 1 in each subsequent year. The report must contain anonymized and aggregated demographic information regarding the founding team members of portfolio companies in which the covered entity made qualifying investments in the prior calendar year.

Covered entities should use DFPI’s standardized survey instrument for collecting founder demographic data and must ensure the aggregated results comply with the statute’s formatting and content requirements.

Defining a “covered entity”

A central compliance determination under the FIPVCC is whether a particular fund or vehicle qualifies as a “covered entity.” This determination requires analysis of (i) venture capital company status, (ii) whether the entity primarily engages in early-stage investing, and (iii) whether the entity has a California nexus. An entity is a covered entity only if it satisfies all three statutory elements.

1. The entity must qualify as a “venture capital company” by meeting one or more of the following conditions.

• 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 50% of its assets (other than short-term investments pending long-term commitment or distribution to investors), valued at cost, consist of “venture capital investments”[1] or “derivative investments”[2]; or
• It is a “venture capital fund” as defined in Rule 203(l)-1 under the Investment Advisers Act of 1940 as amended; or
• It is a “venture capital operating company” as defined in rule 2510.3-101(d) under the Employee Retirement Income Security Act of 1974, as amended.

2. The entity must primarily engage in early-stage investing.

In addition to qualifying as a venture capital company, the entity must primarily engage in investing in, or providing financing to, start-up, early-stage, or emerging growth companies. This requirement is functional in nature and focuses on the entity’s actual investment strategy and activity, rather than its marketing materials or fund naming conventions.

An entity that meets the definitional prong but whose investment activity is not primarily directed toward early-stage companies may fall outside the statute’s scope.

3. The entity must have a California nexus.

Even if an entity qualifies as a venture capital company and primarily engages in early-stage investing, it is only subject to the FIPVCC if it has a California nexus.

A California nexus exists if any one of the following conditions are satisfied:

• the entity is headquartered in California;
• the entity maintains a significant presence or operational office in California;
• the entity makes venture capital investments in companies located in, or with significant operations in, California; or
• the entity solicits or receives capital commitments from California residents.

Notably, physical presence in California is not required. A fund organized and managed outside California may still satisfy the California nexus test if, for example, it admits California-based limited partners or invests in portfolio companies with significant operations in the state. Because the statute does not define terms such as “significant presence” or “significant operations,” nexus determinations require a facts-and-circumstances analysis and should be documented at the vehicle level.

Survey process and data handling

The demographic survey and reporting process under the FIPVCC introduces several procedural safeguards. Covered entities must distribute the DFPI’s standardized survey to the founding team members of each portfolio company in which they have made venture capital investments during the reporting year.

Importantly, response participation must be completely voluntary. The survey instrument must include “decline to state” options, and covered entities may not encourage or incentivize responses.

Responses must be aggregated in a manner that prevents identification of individual respondents, and the report submitted to DFPI must conform to the statute’s anonymization requirements. Covered entities are required to retain records supporting each annual report for at least five years and should integrate survey and reporting process into formal data governance controls.

Non-compliance

The FIPVCC provides DFPI with enforcement authority over covered entities that fail to comply with the law’s registration or reporting requirements. Covered entities that do not submit required filings may be subject to civil or administrative penalties.

As noted in multiple practitioner alerts, penalties can reach up to $5,000 a day for continuing violations, following a 60-day cure period after DFPI provides notice. Higher penalties may be levied for reckless or knowing violations.

Actions for VC firms

Venture capital firms with any California footprint should conduct a documented, fund-level applicability analysis as soon as possible and memorialize nexus determinations. Covered entities should designate internal compliance responsibility, build out survey distribution and data collection workflows that align with the statute’s procedural requirements, and establish internal review and governance procedures for registration and annual reporting.

The March 1 and April 1, 2026, deadlines mark the beginning of a recurring compliance program and not a one-off filing exercise. Firms should view this as a material compliance obligation requiring cross-functional coordination, including legal, investor relations, and data governance teams.

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[1] Cal. Code Regs. tit. 10, § 260.204.9(a)(5) (defining “venture capital investment” as the acquisition of securities in an operating company where the investment adviser, the advised entity, or their affiliate obtains management rights). 

[2] Cal. Code Regs. tit. 10 § 260.204.9(a)(6) (defining “derivative investment” as the acquisition of securities by a venture capital company in the ordinary course of its business in exchange for an existing venture capital investment either (i) upon the exercise or conversation of the existing venture capital investment or (ii) in connection with a public offering of securities or the merger or reorganization of the operating company to which the existing venture capital investment relates).