§ 27501. — 27501. (Added by Stats. 2024, Ch. 41, Sec. 21.)

California § 27501.

• Jurisdiction: California
• Code CORP: Corporations Code - CORP
• Div.: 2.5.
• Title 4.: DIVISION 2.5. Fair Investment Practices by Venture Capital Companies
• Ch. 1.: CHAPTER 1. Fair Investment Practices by Venture Capital Companies

Text

(a)
(1)
Commencing March 1, 2026, a covered entity shall submit to the department the following information in a manner prescribed by the department:
(A)
The name of the covered entity.
(B)
The name, title, and email address of the person who serves as the designated point of contact for the covered entity.
(C)
The designated email address, telephone number, physical address, and internet website of the covered entity.
(2)
The covered entity shall keep the information provided under paragraph (1) updated by submitting any changes
to that information when filing the report required by subdivision (b).
(3)
(A)
If a covered entity fails to update the information provided under paragraph (1) in the report required by subdivision (b) by April 1 of any year, the department shall notify the covered entity that the covered entity has 60 calendar days from the date of the notification to submit the updated information without penalty.
(B)
If a covered entity has not submitted the updated information after the 60-day period described in subparagraph (A) has elapsed, the department may pursue any remedy provided under this chapter.
(b)
By April 1, 2026, and annually thereafter, a covered entity shall report to the department all of the following information about its funding determinations:
(1)
At an aggregated level, all of the following information for the founding teams of all of the businesses in which the covered entity made a venture capital investment in the prior calendar year to the extent the information was provided pursuant to the survey described in paragraph (1) of subdivision (c):
(A)
The gender identity of each member of the founding team, including nonbinary and gender-fluid identities.
(B)
The race of each member of the founding team.
(C)
The ethnicity of each member of the founding team.
(D)
The disability status of each member of the founding team.
(E)
Whether any member of the founding team
identifies as LGBTQ+.
(F)
Whether any member of the founding team is a veteran or a disabled veteran.
(G)
Whether any member of the founding team is a resident of California.
(H)
Whether any member of the founding team declined to provide any of the information described in subparagraphs (A) to (G), inclusive.
(2)
(A)
During the prior calendar year, the number of venture capital investments to businesses primarily founded by diverse founding team members, as a percentage of the total number of venture capital investments the covered entity made, in the aggregate and broken down into the categories described in subparagraphs (A) to (H), inclusive, of paragraph (1).
(B)
The information provided pursuant to this subparagraph shall be anonymized to the extent possible.
(3)
During the prior calendar year, the total amount of venture capital investments to businesses primarily founded by diverse founding team members, as a percentage of venture capital investments made by the covered entity, in the aggregate and broken down into the categories described in subparagraphs (A) to (H), inclusive, of paragraph (1).
(4)
The total amount of money in venture capital investments the covered entity invested in each business during the prior calendar year.
(5)
The principal place of business of each company in which the covered entity made a venture capital investment during the prior calendar year.
(c)
(1)
A covered entity shall obtain the information required by subdivision (b) by providing each founding team member of a business that has received funding from a covered entity with an opportunity to participate in a survey for the purpose of collecting the information.
(2)
The survey described in paragraph (1) of subdivision (b) shall be provided pursuant to a standardized form specified by the department. The survey shall include a “decline to state” option for each question on the survey.
(3)
A covered entity shall provide a written disclosure to each founding team member prior to, or concurrently with, the survey described in paragraph (1) of subdivision (b) that states all of the following:
(A)
The founding team member’s decision to disclose their demographic information is voluntary.
(B)
No adverse action will be taken against the founding team member if they decline to participate in the survey.
(C)
The aggregate data collected for each demographic category will be reported to the department.
(4)
A covered entity shall not provide the survey described in paragraph (1) of subdivision (b) and the disclosure described in paragraph (3) to a founding team member until after the covered entity has executed an investment agreement with the business and made the first transfer of funds.
(5)
Neither a covered entity nor the department shall in any way encourage, incentivize, or attempt to influence the decision of a founding team member to participate in the survey described in paragraph (1) of subdivision (b).
(d)
A covered entity required to conduct the survey described in paragraph (1) of subdivision (c) shall do both of the following:
(1)
Collect survey response data from the founding team members in a manner that does not associate the survey response data with an individual founding team member.
(2)
Report the survey response data pursuant to paragraph (1) in a manner that does not associate the survey response data with an individual founding team member.
(3)
A covered entity may satisfy the requirements of this chapter by providing a report prepared by a business that controls each covered entity at any time during the prior calendar year if the report contains all of the information required by subdivision (b).

Legislative History

Added by Stats. 2024, Ch. 41, Sec. 21. (SB 164) Effective June 29, 2024.