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New California Law Requires Diversity Among Venture Capital Investments

In October 2023, California Governor Gavin Newsom signed a law making the Golden State the first in the nation to require venture capitalists to disclose the gender and race of the founders they fund. 

Female founders and civil rights groups say this bill could make a huge difference in exposing the most discriminatory venture firms in Silicon Valley and create more opportunities for women-run firms. According to the business data firm Pitchbook, companies founded by all-female teams accounted for just 2% of venture capital funding last year. Those led by Black women and Latinas received even less. 

The Fuller Project was the first news outlet to bring significant attention to the issue. Following their story, published in partnership with The Guardian, our reporter Hanisha Harjani made appearances on the national NPR program Here and Now, Marketplace, and CapRadio, in Sacramento, the state capital. Their work was shared widely among advocates and lawmakers ahead of Governor Newsom’s deadline to sign or veto Senate Bill 54, which was passed by California lawmakers in September.

California represented over 40% of the $246 billion in venture capital funding invested in the United States in 2022, according to data provided by Pitchbook. Because the law will apply to venture capital firms based in California along with those that invest in the state or solicit funds from residents, the law’s impact will likely resonate from Silicon Valley to Wall Street and beyond.  The Fuller Project was widely cited when Governor Newsom signed the law.

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