California has enacted new venture capital reporting rules that may apply to many Illinois‑based VC firms, even if you do not operate in California.
Under the Fair Investment Practices by Venture Capital Companies Act (SB 54, amended by SB 164), any firm with a California nexus may now be required to register with the California Department of Financial Protection & Innovation (DFPI) and submit annual demographic reporting related to the founding teams of their portfolio companies.
Who Is Covered
A firm may be considered a “covered entity” if it meets any one of the following criteria:
- Invests in a company located in or with significant operations in California
- Solicits or accepts capital from any California resident (an LP or investor)
- Has a significant presence or operational activity in California
- Is headquartered in California
Notably, just one California portfolio company or one California LP may be enough to trigger coverage.
Key Deadlines
- March 1, 2026 – Registration with DFPI required for covered entities
- April 1, 2026 – First annual demographic report due, covering investments made in calendar year 2025
Founders’ participation in the demographic survey is voluntary; firms report only aggregated, anonymized data.
DFPI may impose fines of up to $5,000 per day for non‑compliance.
What Illinois VC Firms Should Do Now
- Determine whether your firm qualifies as a “covered entity.”
Even one California investment or LP may trigger reporting responsibilities.
- Review your 2025 investments to identify which founding teams must receive the DFPI demographic survey (founders may decline to answer).
- Develop internal processes to collect, secure, and aggregate survey responses.
- Monitor DFPI’s Venture Capital Companies Reporting Program page for the registration portal and ongoing updates.
IVCA will continue monitoring DFPI guidance and will share additional information as it becomes available.
