California has suspended enforcement of a law that would have required venture capital firms to disclose demographic data about the startup founders they back, following appeals from investors to Governor Gavin Newsom's administration.

The law was designed to increase transparency in venture capital funding by mandating that firms report on the diversity of entrepreneurs receiving investment. The measure aimed to address longstanding concerns about unequal access to startup funding across different demographic groups.

Venture capital investors had lobbied against the reporting requirements, arguing the regulations would create administrative burdens and potentially harm their business operations. Their appeals to state leadership appear to have been successful in securing the delay.

This marks the second time California has postponed the deadline for compliance with the diversity reporting mandate. The state has not announced a new timeline for when the requirements might take effect.

The suspension comes as various states and organizations continue to grapple with how to address diversity and equity issues in the venture capital and startup ecosystem, where funding has historically been concentrated among certain demographic groups.