California’s Department of Financial Protection and Innovation (DFPI) has expanded reporting obligations for state registered investment advisers. In addition to existing financial and disclosure requirements, advisers with certain private company investment activities will face a new annual reporting mandate beginning in 2026.
Core Requirements for State Registered Advisers
- Form ADV must be filed and updated annually through IARD, with prompt amendments for material changes.
- Minimum net worth of $10,000 or $35,000 is required to be maintained by the DFPI registered adviser depending on whether the adviser has custody of client assets.
- Annual financial statements must be prepared in accordance with GAAP and filed with DFPI; advisers with custody must submit audited financials.
New 2026 Reporting Obligation for Private Company Investments
Beginning March 1, 2026, advisers managing funds or vehicles that invest primarily in private companies and have a defined California nexus will be required to submit an annual report to DFPI. The requirement applies when the adviser:
- Invests through a fund or SPV with a private company or early stage investment strategy, and
- Meets nexus criteria such as California based personnel, investments in California companies, or capital raised from California residents.
When in scope, advisers must report:
- Portfolio company information, as prescribed by DFPI, inclusive of Demographic data voluntarily collected by the portfolio company management, Advisers must note when a company declines to participate.
The reporting portal opens March 1, 2026, and the initial filing is due April 1, 2026, with annual updates thereafter.
Additional Notes for Venture Capital Funds
While the new reporting rule applies broadly to advisers investing in private companies, VC funds and venture focused SPVs are more likely to fall within scope because they typically:
- Invest in early stage private companies,
- Hold management or information rights through board seats or management rights letters, and
- Maintain California nexus through personnel, portfolio companies, or fundraising.
Recommended Next Steps
- Evaluate which funds or vehicles meet the private company investment and nexus criteria.
- Identify portfolio companies that must be included in the 2026 filing.
- Establish a workflow for distributing DFPI’s survey, collecting responses, and preparing the annual submission.
- Coordinate with legal and compliance professionals to ensure timely and accurate filings.
Contact Us
For more information on this topic, please contact a member of Withum’s Financial Services Team.
