Nothing To Hide: California's New VC Diversity Reporting Law

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Nothing To Hide: California's New VC Diversity Reporting Law
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Edwards is Managing Partner of H Venture Partners, venture investor in consumer brands. Before H, she backed Peloton, Freshly, and Bill.com, in the earliest rounds. Before founding H Venture Partners, Edwards with Maywic Select Investments, an early investor in Peloton (IPO), Roots (IPO), Freshly (acquired for $1.5Bn by Nestle), Joy, ALOHA, ONE HOPE Wine, GoldieBlox, The Infatuation (merged: Zagat), Soma (acquired: Full Circle), and SkinnyMom (acquired: Womanista). Edwards was previously with We

In a landmark move yesterday on October 9, 2023, California took a significant step towards promoting diversity in the venture capital world, becoming the first state to pass legislation on diversity in venture capital, specifically, requiring the vast majority of VCs to report on the demographics of the founders in whom they invest.

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Firms will be required to annually survey their founders, who can opt-out, on their gender identity, race, ethnicity, disability status, and veteran status. This information will be submitted to the California Civil Rights Department, which then will publish it in a searchable online database. Firms that do not submit survey data could be fined.

While California is the first to legislate, this type of reporting is alive and well in the State of Illinois, spearheaded by Chicago Teachers Pension Fund, the Illinois Municipal Retirement Fund, and a plethora of Chicago and Illinois pension funds. Funds receiving capital from these institutional investors have been reporting their diversity stats for years, so it can be done – and pretty easily.

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