Venture capital firm sues California over unconstitutional reporting mandate

Sacramento, California; May 28, 2026: A Colorado-based venture capital firm filed a lawsuit today challenging a California law that forces venture capital funds to interrogate the founders of companies they invest in about their race, ethnicity, gender identity, and sexual orientation — and report that data to the State. 1517 Fund alleges that the law violates the First and Fourteenth Amendments and the Commerce Clause of the U.S. Constitution.

“Sorting people by race is never a neutral act. California enacted a law under the guise of fighting discrimination, but the law itself mandates race-based and sex-based classifications and creates a public pressure campaign that favors certain groups over others,” said Wilson Freeman, an attorney with Pacific Legal Foundation. “1517 Fund should be free to run their fund based on merit and business judgment, not California’s preferred identity categories.”

Founded by Danielle Strachman and Michael Gibson, 1517 Fund backs young, unconventional founders working on ambitious science and technology ideas, often outside traditional academic or credentialed pathways. Its mission is to find overlooked talent early, give them the support to build bold companies, and help accelerate progress by trusting curious, driven people to pursue world-changing innovations.

The company’s lawsuit challenges a California law as an unconstitutional overreach that violates the freedom of speech, the guarantee of equal treatment under the law, and the basic principle that states cannot govern businesses with no meaningful presence within their borders. A victory would protect 1517 Fund and every other venture capital firm that California is attempting to regulate from afar.

Pacific Legal Foundation represents 1517 Fund free of charge. The case is 1517 Fund v. KC Mohseni.