Founded by Danielle Strachman and Michael Gibson, 1517 Fund bets on young entrepreneurs before the world takes them seriously—dropouts, renegade scientists, and builders who don’t need a credential to prove they’re onto something.
Danielle and Michael came to this work after years of helping promising young people pursue projects in science and technology outside traditional academic and credentialed paths. That experience shaped 1517’s core vision: find overlooked talent early and help them turn big ideas into real companies. Where most investors screen for degrees and pedigree, 1517 screens for ideas and potential.
A California law forces a different approach. The law was enacted in 2023, requiring venture capital funds to interrogate the founders of companies they invest in about their race, ethnicity, gender identity, and sexual orientation—and then report that sensitive personal data to the State, which in turn makes that data available to the public.
The State’s rationale is to detect investment discrimination. But all it shows is that California values group membership over individuality. By publishing the data and calculating each fund’s “diversity” percentages, it signals that race matters more than ideas. And it pressures venture capitalists to make investment decisions based on race, ethnicity, and gender, rather than on merit and innovation.
California’s law casts a wide net. It covers not just California-headquartered funds, but any VC that invests in a California company, has an office in the state, or so much as solicits a California resident as an investor.
1517 Fund is challenging the law on three constitutional grounds.
The First Amendment protects not just the right to speak freely, but the right to stay silent. When the government compels a business to seek out and report information it would never otherwise gather—particularly information as sensitive as race, sexuality, and gender identity—that is compelled speech.
The Equal Protection Clause is equally clear: The government cannot sort people by race without a compelling justification. The law doesn’t merely record investment patterns; it publicly scores each VC firm on the “diversity” composition of its portfolio, creating an obvious pressure campaign to steer investment decisions toward preferred groups.
Finally, the Due Process and Commerce Clauses limit California’s reach. For a state to impose its law on an out-of-state business, there must be significant contact between that business and the state. 1517 Fund is located in Colorado and invests in a number of extremely early-stage companies with little to no connection with California. Subjecting 1517 Fund to California law over such nonexistent contacts with California is beyond the State’s authority.
The American Dream of building a business, making independent judgments, and being evaluated on merit—not identity—is what drew Danielle and Michael to venture capital and entrepreneurship. California’s law threatens that ideal for their business and for every founder whose private information gets swept up in the State’s ideological agenda.
What’s At Stake?
- The First Amendment protects the right to stay silent just as much as the right to speak. The government cannot force businesses to gather and report sensitive information about people’s race, sexuality, and gender identity.
- Treating people according to immutable characteristics like race or sex violates equality before the law. People should be treated as individuals.
- A state may regulate businesses within its borders, but it cannot extend its reach to companies with no meaningful presence simply to advance its ideological agenda.
