Gov. Newsom Signs Bill Requiring Venture Capitalists Report Diversity of Businesses they Invest in
Despite ‘problematic provisions’ and ‘unrealistic timelines’ Newsom signs bill
By Katy Grimes, October 9, 2023 7:59 am
Because “Venture capital investment does not reflect the diversity of California,” Gov. Gavin Newsom signed a bill to require the venture capitalists to report annually to the California Civil Rights Department the diversity of the founding members of the businesses they invested in.
“No joke,” to quote a certain president.
Authored by Berkeley Democrat, Senator Nancy Skinner, “a social justice advocate, clean energy and climate change trailblazer,” who has never run a business or signed the front of a paycheck – she claims SB 54 will “bring transparency to venture capital investments in California and is designed to help more women- and minority-owned startups access vital VC funding. If signed into law, SB 54 would be the first such transparency measure in the nation.”
The bill has nothing to do with the business of investing in start-up businesses, other than to harm the practice. Venture capital investing has made it possible for many businesses which had a solid business plan, but needed the capital: Apple, Facebook, Amazon, Google, Intel, Microsoft, Whole Foods and many others.
In fact, early America was funded by venture capitalists for decades, albeit from England. When pilgrims made the voyage from England to America, their trips were funded, as was the “start-up” money to build their villages, businesses, and governments with the hope they would become successful and the investors would benefit financially. What would America look like if only women and pilgrims-of-color were funded under a diversity law?
In addition to the patent stupidity and needless meddling of Skinner’s SB 54, some believe the bill violates the First Amendment by prying into the gender, racial, ethnicity and sexual preference status of the founders of investment companies, creating an undue burden and invasion or privacy.
“Regardless of the bill’s constitutionality, it is so poorly drafted as to amount to gibberish,” the National Law Review said.
Well said – this is as ridiculous a bill as it is unnecessary.
Additionally, In April 2022, a judge tossed out California’s corporate diversity law to require publicly held corporations based in the state to include racial minorities and members of the LGBTQ community on their executive boards, ruling it “unconstitutional.” This was California passing another “first” with the board diversity quota, yet it followed an equally legally dubious 2018 law mandating female directors on all boards of the state’s publicly held corporations.
The judge went so far as to suggest the law was so obviously unconstitutional, it didn’t even merit a trial.
Bizarrely, Gov. Newsom signed the bill and said in his signing message he was doing so despite “problematic provisions” and “unrealistic timelines.” He said his administration will propose cleanup language in 2024.
Actually, that is the purpose and responsibility of legislative committees before the bill is signed.
The National Venture Capital Association opposed the bill arguing that the “diversity date collected will be misleading and counterproductive,” the process provided by the bill “is inefficient, unnecessarily punitive, and will violate privacy,” and the bill “creates financial risk and complexity for emerging and diverse venture capitalists.”
The bill is supported by the F5 Collective, a fund that exclusively invests in female founders. Why aren’t they required to invest equally in male-owned businesses?
Besides, if gender is “neutral” in California, why mandate venture capitalists invest in more women and minority owned businesses? California Democrats have been passing bills for years attempting to blur the differences between women and men. So why is this necessary? (hint: it is not)
SB 54 was passed entirely on party lines, 32-8 in the Senate, and 60-15 with 5 abstentions in the Assembly – more evidence that the California Legislature is not doing the business of the people of the State of California.
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If you want to lose your capital “invest” in a woke business that fits Noisome’s definition of “diverse”. I can hear venture capitalists money headed out of state in a stampede.
Prune faced Democrat Senator Nancy Skinner has never started or run a business but she and the rest of Marxist Democrats in the legislature want to dictate how venture capitalists invest their own money? Senator Nancy Skinner has been a parasite on taxpayers her entire life like most Democrats legislature and she would starve without taxpayers supporting her?
This is Babylon Bee territory, except it’s not funny of course. And the Babylon Bee item would be more plausible. It now seems as though EVERY SINGLE THING that comes out of this Dem legislature —- especially from the Usual Suspects like what’s-her-name Nancy Skinner —- is either hopelessly vague and sloppy or unconstitutional on its face. Or both! I wonder if they even know it. They act like zombies in a trance so I really do wonder. Then it not only passes but it’s signed by the Gov? This won’t survive, but can we maybe PLEASE just shut this crap down BEFORE the lengthy and troublesome challenges inevitably wipe it out?
Aren’t the venture capitalists of this state leftists? Maybe they will learn voting has consequences.
Everyone’s a Leftist…until they get smacked with the costs.
Just like Mike Tyson: “everyone has a plan until they get punched in the mouth.”
Let’s call this the “Welcome to Texas” bill.
“Venturing” is risky enough, without requiring unqualified people to be hired because of the boxes they check.
ATTN ALL VC’S: Head for another state. Newsom and CA hates you.
“Authored by Berkeley Democrat, Senator Nancy Skinner, “a social justice advocate, clean energy and climate change trailblazer,” who has never run a business or signed the front of a paycheck.”
Yes, but she certainly knows how to appropriately check all boxes on a Woke checkbox.
This is yet another unconstitutional CA law that will be stuck down by the courts as such in due course.