Fearless Fund, a venture capital firm focused on supporting Black women business owners, has encountered a setback in its efforts to issue grants. The firm’s Strivers Grant, which awards grants exclusively to businesses owned by Black women, has faced legal challenges. The American Alliance for Equal Rights (AAER) sued Fearless Fund, arguing that the grant discriminated against non-Black women founders who were ineligible to apply. On Monday, an appeals court upheld a preliminary injunction against Fearless Fund’s grant program, citing a likely violation of the Civil Rights Act of 1866, which prohibits racial discrimination in contracts.
The ruling does not necessarily mark the end of the case. Fearless Fund is considering its options, including the possibility of going to trial. The firm’s lawyer, Alphonso David, emphasized that the discrimination in access to funding that the Strivers Grant aims to address is a longstanding and undeniable issue. Fearless Fund’s CEO, Arian Simone, expressed determination to continue fighting the lawsuit, stating that the foundation is committed to leveling the playing field for underrepresented groups.
Edward Blum, the founder of AAER and a conservative activist known for his successful efforts to overturn affirmative action in universities, welcomed the court ruling, asserting that racially exclusive grant programs are unjust and polarizing. The news of Fearless Fund’s lawsuit has stirred controversy within the startup and venture ecosystem. Some advocates for diversity expressed concern about the potential impact on diversity-focused venture funds and the language used in corporate diversity programs.
Despite the setback, legal experts believe that Fearless Fund still has a case. The recent ruling only upheld the injunction against issuing grants; it did not determine the merits of the case itself. Dar’shun Kendrick, a lawyer and Georgia state representative, believes there is still an opportunity to argue the case on its merits.
The tech industry’s response to the lawsuit has been relatively muted, signaling a potential shift in the industry’s outspoken support for diversity, equity, and inclusion initiatives. Fearless Fund has reportedly lost many of its partnerships, with only JPMorgan and Costco remaining as sponsors. Even Mastercard, which sponsored the contested Strivers Grant, has refrained from commenting publicly on the lawsuit.
In conclusion, Fearless Fund’s legal battle over its Strivers Grant highlights the ongoing challenges faced by underrepresented groups in accessing funding and support. While the recent court ruling presents a setback for Fearless Fund, the firm remains determined to continue its mission of leveling the playing field for Black women entrepreneurs. The outcome of this case could have significant implications for diversity-focused venture funds and the language used in corporate diversity programs. The fight is far from over, and there is still an opportunity for Fearless Fund to argue their case on the merits.
