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Newsom Hypocrisy Exposed by His Handling of Diversity Reporting Bills
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By CalMatters
Published 6 months ago on
October 31, 2023

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Coming soon to California: a diversity reporting mandate for venture capital firms. Not coming soon to California: a diversity reporting mandate for Gov. Gavin Newsom.

Alexei Koseff
CalMatters

As the bill signing period wrapped up earlier this month, Newsom approved a measure that will force venture capital firms operating in California to collect and disclose demographic data about the founders of the companies they invest in — while on the very same day, he vetoed for the third time a similar transparency requirement for his own gubernatorial appointments.

Senate Bill 54 by state Sen. Nancy Skinner, a Berkeley Democrat, was among nearly 900 measures that Newsom signed into law this year. It represents an effort to boost lagging venture capital investments in businesses founded by women, Latino, and Black entrepreneurs.

Under the law, venture capital firms must annually survey the founding teams of the companies they invested in during the year for information such as gender identity, race, ethnicity, and disability status, as well as whether they are LGBTQ+, military veterans or California residents. Aggregated data, along with how much money was invested in those businesses, will be reported to the state starting March 1, 2025.

The National Venture Capital Association opposed the bill, arguing it would “produce misleading and counterproductive data that would hurt the cause of diversity” because founders from diverse backgrounds would be more likely to participate in the voluntary surveys, exaggerating their representation in startup investments.

Newsom identified his own issues with “problematic provisions,” “unrealistic timelines” and the cost to the state of administering the program — some of which he promised to address in cleanup language in the next budget — but ultimately signed the measure.

  • Newsom, in his signing statement: “This bill resonates deeply with my commitment to advance equity and provide for greater economic empowerment of historically underrepresented communities.”

The governor looked less favorably on SB 702 by Sen. Monique Limón, a Santa Barbara Democrat who has spent the past three years trying to pass a law documenting the diversity of gubernatorial appointments. Newsom again rejected her latest effort, which would have required the governor’s office, starting in 2026, to annually publish aggregate demographic information of appointees to state boards and commissions in the previous year, including their ethnicity, gender, disability status, region, party affiliation, and veteran status

In his veto message, Newsom noted that the data would be voluntarily self-reported and argued that it would therefore “not necessarily accurately reflect the diversity of appointees.” Limón expressed frustration in a statement to CalMatters that her proposal was in line with the goals and data collection methods of the venture capital firm reporting mandate that Newsom signed.

  • Limón: “We believe that this Administration has taken strides to diversify our statewide appointees, but more needs to be done to ensure we have mechanisms in place long after this Administration is gone.”

The governor’s office did not respond to repeated questions from CalMatters about why Newsom supported a diversity reporting requirement for venture capital firms but not for himself, why he signed that bill in spite of the concerns he identified, and why he thought that self-reported data was only a problem for the gubernatorial appointments proposal.

  • Newsom spokesperson Omar Rodriguez, in an email: “Thanks for reaching out. The messages for SB 54 and SB 702 speak for themselves here. Will let you know if we have anything further to add.”

About the Author

Alexei covers Gov. Gavin Newsom, the Legislature, and California government from Sacramento. He joined CalMatters in January 2022 after previously reporting on the Capitol for The Sacramento Bee and the San Francisco Chronicle, where he broke the story of Newsom’s infamous dinner at The French Laundry restaurant. Alexei is a Bay Area native and attended Stanford University. He speaks fluent Spanish.

About CalMatters

CalMatters is a nonprofit, nonpartisan newsroom committed to explaining California policy and politics.

 

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