California recently passed a bill, known as SB 54, which mandates venture firms operating within the state to disclose the diversity breakdown of their investments. The news of this bill quickly spread throughout the startup world, prompting a diverse range of reactions from investors.
Key Takeaway
Investors are divided on the potential impact of California’s diversity bill, SB 54, suggesting that significant change may be challenging to achieve.
Support, Criticism, and Satire
The response to the diversity bill has been divided, with some expressing support, others providing conditional support, and still others dismissing the legislation’s potential for effecting real change. Additionally, there were those who mocked the bill. Nevertheless, both supporters and critics raised valid points, leading us to gather insights from industry players to consolidate their thoughts on the matter.
Mixed Expectations
Bernard Coleman, a lawyer at the Coleman Law Firm, expressed skepticism regarding the potential impact of SB 54 on increasing diversity in VC investments. He emphasized the complex dynamics surrounding the flow of money in the tech industry, with venture capitalists often being funded by wealthy individuals who possess the means to circumvent legislation they dislike and the power to influence or modify such legislation.
Coleman further posited that due to this legislation, many venture capitalists may choose to relocate their operations outside of California to avoid becoming subject to SB 54. Nevertheless, circumventing the bill entirely would likely send a negative message to the industry. Madison Long, CEO of Bay Area-based startup Clutch, remarked that if some investors opt to leave the state, it would be their prerogative. However, she believes that this choice would reflect poorly on those individuals, as the tight-knit tech community is bound to take note of such actions.
