Tax & Compliance
SB 164: California’s Founder Demographic Reporting Law
At a Glance
SB 164 is a California law about reporting basic demographic information about founders who receive venture capital funding.
Some venture capital firms with ties to California are considered “covered entities” under the law.
For investments made on or after January 1, 2025, covered firms collect a short, voluntary survey from founders.
Covered firms must register with a state agency by March 1, 2026, and file the first yearly report by April 1, 2026.
The state posts the reports online, and penalties can apply for late, missing, or seriously incorrect reports.
Introduction
California passed Senate Bill 164 (SB 164). It updated and replaced an older law, SB 54, but the main idea remains the same.
SB 164 is meant to increase transparency about who is getting venture capital funding. If a venture capital firm has a connection to California, the law may treat it as a “covered entity.” Covered firms collect demographic information from the founders they fund, report that information to the state, and the state publishes it.
Which Venture Firms Count as “Covered Entities”
SB 164 uses the same basic framework as the earlier “Fair Investment Practices by Venture Capital Companies Law,” but it narrows and clarifies which venture capital companies count as “covered entities.”
Under SB 164, a venture capital company can be a covered entity if it:
is headquartered in California, or
has a significant business presence in California, or
invests in businesses based in California or businesses with significant operations in California, or
asks for or accepts investments from California investors.
What Information Gets Collected and Reported
Starting with 2025 investment activity, the SB 164 reporting setup has three main parts.
1) A Voluntary Survey for Founders
Covered firms collect standardized, voluntary demographic survey information from people on a portfolio company’s founding team. It includes characteristics such as race, ethnicity, gender, and other self-identified characteristics.
2) A Yearly Report to a State Agency
Covered firms file a report every year with the Department of Financial Protection and Innovation (DFPI). That report includes:
demographic data that is combined across companies and anonymized,
the total amount of capital invested, and
information about how many portfolio companies and founding teams are labeled “diverse” and “non-diverse,” plus their characteristics.
3) Basic Firm Contact Information
Covered firms also provide basic information about the venture firm itself, including:
the firm’s website, and
a compliance contact person whose name, title, and email address stay up to date with DFPI.
After DFPI receives the report, DFPI posts it on its website.
Key Dates
January 1, 2025: Covered firms collect founder demographic information for investments made on or after this date.
March 1, 2026: Covered entities register with DFPI and name a point of contact.
April 1, 2026: The first annual report is due (covering 2025 activity). After that, April 1 is the due date each year.
If a deadline is missed: DFPI notifies the VC and gives a 60-day grace period. After that, penalties can apply.
Enforcement And Risk
SB 164 moved oversight from the Civil Rights Department to the DFPI, a financial regulator.
DFPI can take action and seek penalties if a covered firm does not file, files late after the grace period, or files a report with major inaccuracies. Because DFPI posts the reports publicly, firms that do not comply or look unusual compared to others may face public scrutiny.
If you think SB 164 might apply to your firm, consider speaking with your legal counsel to understand what, if any, obligations you may have under SB 164.
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