My Fund Isn’t Based in California. Do I Still Have to Comply With Its New VC Reporting Law?

Your fund is not headquartered in California. So why does this law keep showing up in your inbox?

Because California suspended the law just days before its compliance deadline, and many fund managers treated that as a green light to stop paying attention.

It is not.

If you have even one California resident LP, one California employee, or one portfolio company with California ties, the law may reach your fund. The suspension gives you more time. It does not remove the underlying law.

California’s Department of Financial Protection and Innovation (DFPI) suspended implementation and enforcement of the Fair Investment Practices by Venture Capital Companies Act (FIPVCC) in March 2026, shortly before the April 1, 2026 compliance deadline.

FIPVCC was the first US law requiring venture funds to report demographic data about the founders they backed. DFPI has said it will restart formal rulemaking later in 2026, although it has not provided a firm date.

What FIPVCC Actually Requires

FIPVCC requires covered venture capital companies to collect and report demographic information about founders of companies they invest in.

Covered funds would submit this information annually to DFPI, which would publish aggregated results.

Individual founder information remains confidential.

The reporting requirement itself is not optional once the rules are finalized.

That means fund managers should not treat the suspension as a reason to abandon their data collection plans.

The rules may change during the new rulemaking process, but the underlying statute remains relevant.

The Nexus Test Can Catch Out of State Funds

This is where many fund managers get caught. FIPVCC does not simply ask where the fund is headquartered.

It looks at the fund’s California contacts. A fund can fall within the law if it has:

• A single California resident limited partner
• A California based employee, including a remote employee
• An investment in a portfolio company with California ties

You only need to hit one of these connections.

That means a fund based in New York, Texas, London, or another jurisdiction can still fall within the law.

“Suspended” Does Not Mean “Repealed”

This distinction is critical.

DFPI suspended implementation and enforcement while it went through another rulemaking process.

It did not repeal the underlying statute.

Three points fund managers should keep in mind:

• SB 54 and SB 164 remain in force.
• DFPI has said enforcement will resume once the rules are finalized.
• There is currently no firm timeline for completion.

So the correct approach is not to ignore FIPVCC.

It is to use the suspension period to prepare.

What Could Happen When Enforcement Resumes?

The financial exposure is not trivial.

Knowing or reckless violations can result in penalties exceeding $5,000 per day. The relevant enforcement clock begins when rulemaking is completed, not when a fund manager realizes the requirement applies.

That makes preparation important.

A fund that waits until DFPI finalizes the rules may have very little time to build the required data collection and reporting process.

Your Subscription Documents May Need Updating

Compliance is not just about collecting data internally.

Your subscription documents and side letters may need to address demographic reporting.

That means fund managers should review their existing documents before the final rules are issued.

You may need to determine what information will be collected, how it will be obtained, what disclosures investors and portfolio companies receive, and how the process fits into your existing onboarding workflow.

Doing this work early gives you more time to adjust once DFPI publishes the final requirements.

Common Founder Mistakes

• Treating “suspended” as “repealed”: Fund managers may hear that DFPI suspended enforcement and conclude that FIPVCC no longer matters. That is incorrect. The underlying statute remains in force, and DFPI has stated that enforcement will resume once the rulemaking process is completed. A fund that stops tracking the law entirely could be unprepared when the rules return.
• Assuming the fund’s location determines coverage: A fund manager may believe the law cannot apply because the fund is headquartered outside California. The FIPVCC nexus test looks at California connections instead. A single California resident LP, one California employee, or a portfolio company with California ties can bring an out of state or foreign fund within the scope of the law.
• Waiting for the final rule before building a process: Waiting may seem reasonable while the rules are being rewritten. But building a data intake process, updating subscription documents, and addressing side letters can take time. Funds that wait until the final rule is released may have to build the entire compliance process under a tight deadline.
• Failing to map California connections: Fund managers may check where the fund is incorporated and stop there. That misses the broader nexus test. You need to review your LPs, employees, and portfolio companies to identify California connections that could bring the fund within FIPVCC. A periodic review also helps catch new California relationships as the fund grows.

10-Minute FIPVCC Self-Check

Before DFPI restarts enforcement, ask:

• Do I have any California resident LPs?
• Do I have employees working from California, including remote employees?
• Does any portfolio company have California ties?
• Do my subscription documents and side letters address demographic reporting?
• Do I have a process for collecting founder demographic data?
• Have I assigned someone to monitor DFPI’s rulemaking timeline?

If you cannot answer these questions, review your FIPVCC exposure now.

Bottom Line

A suspended law is not a dead law.

California’s FIPVCC remains on the books, even though DFPI suspended implementation and enforcement in March 2026, shortly before the April 1 compliance deadline.

The law’s nexus test can reach funds outside California through a California resident LP, California employee, or portfolio company with California ties.

And when rulemaking is complete, DFPI has said enforcement will resume.

The suspension gives fund managers time.

Use it.

Map your California connections. Review your subscription documents. Prepare your demographic data process. And keep someone responsible for tracking DFPI’s next move.

It is much easier to prepare while enforcement is paused than to scramble after the rules are finalized.

Is Your Fund Actually Exempt From California’s VC Reporting Law?

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