Over the last 20 years, women-owned businesses received 2.4 percent of all venture capital. Numbers have hovered at or below that in recent years. In 2022, women-owned businesses received 1.9 percent of all venture capital, down from 2.4 percent in 2021. California’s bill aims to improve transparency.
California’s Senate Bill 54, a venture capital bill, became law on October 8, 2023, with Governor Gavin Newsom’s signature. He released a statement. Senator Nancy Skinner, who proposed the bill in late 2022.
This first-of-its-kind legislation will require venture capital firms in CA to report the diversity of the founders they back. Starting March 1, 2025, VCs must produce annual reports about their investing. The legislation states this data must include information on each member of the founding team’s gender identity, race, ethnicity, disability status, LGBTQ+, veteran or disabled veteran and if they are a resident of California.
The requirement applies to venture capitalists headquartered in California, funding CA-based companies, doing significant work in the state or receiving funds from residents. The public will be able to access this data.
Why a venture capital bill?
The bill’s goal is to improve access to venture capital and shine a light on where these funds are invested. According to Sen. Skinner, “California is extending its nation-leading efforts to expand equity by bringing transparency to venture capital investment decisions with the goal of helping more women- and minority-owned startups access the VC lifeline upon which entrepreneurs depend.”
The effort to close the gender gap is ongoing. California is setting the pace.
Learn more about gender equity in venture capital here.
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