The Great Rollback: Tech’s Ongoing DEI Backlash
The landscape of diversity, equity, and inclusion (DEI) programs in the tech industry is changing rapidly. In the wake of the murder of George Floyd, many companies implemented DEI initiatives, but now there seems to be a backlash against these efforts. Big Tech giants like Zoom, Google, and Meta have started to defund their DEI programs, and funding to Black founders has continued to decline. Lawsuits targeting DEI programs have also emerged, forcing companies to hide their inclusion efforts. This year is shaping up to be a turning point for DEI, with states banning affirmative action measures and a presidential election on the horizon.
AAER vs. Fearless Fund Lawsuit
One notable lawsuit in the tech industry is the AAER vs. Fearless Fund case. The American Alliance for Equal Rights (AAER), led by Edward Blum, filed a lawsuit against Fearless Fund for offering business grants exclusively to Black women. The AAER argues that this grant discriminates against white and Asian American founders. The case is currently in court, and Fearless Fund is prohibited from awarding grants to any more Black women. The lawsuit has had significant financial implications for Fearless Fund, causing them to lose potential commitments, cut staff, and face expensive legal bills. This case could have far-reaching effects throughout the ecosystem.
Critics of DEI
Opposition to DEI initiatives has grown significantly in recent times. Prominent figures in venture capital, such as Elon Musk, Peter Thiel, and Paul Graham, have voiced their disagreement with DEI. This divide is likely to deepen as billionaires continue to exert their power and influence. However, there are also those within the industry who are actively working towards change and inclusivity. While progress takes time, some promises made in this regard have not been fulfilled.
Government Initiatives on DEI
Several states are taking steps to address diversity in the venture capital industry. California passed a bill mandating that venture capital firms disclose the diversity breakdown of the founders they support. Massachusetts is also considering a bill that would extend workplace laws to the venture industry, and New York City venture firms have formed an alliance to promote diversity. However, there are concerns and hesitations surrounding these initiatives. Rep. Emanuel Cleaver has faced obstacles in his efforts to make endowment investing more transparent, with some educational institutions opposing his bill.
DEI in Red States
DEI has become a contentious issue in red states, with many banning affirmative action measures. Despite this, tech hubs in these states, such as Tulsa, Atlanta, Miami, and Austin, are leading efforts to make tech more accessible outside of the Bay Area. However, the governing states may impede this progress. For example, Gov. Ron DeSantis of Florida is pushing anti-DEI measures and targeting diverse fund managers through proposed changes to ESG investing.
National Efforts on DEI
The Congressional Black Caucus (CBC) is actively investigating the state of DEI in the tech industry. The CBC has written letters to OpenAI and the Department of Labor to understand how the industry supports Black talent. OpenAI has responded to the CBC’s inquiries, shedding light on their approach to DEI.
DEI Funding Data
Funding to Black founders has seen a continuous decline since 2020. Last year was no exception, highlighting the ongoing challenges faced by marginalized founders in accessing funding.
DEI View from Abroad
The treatment of marginalized founders in the United States has implications for global venture ecosystems. Stay updated on how other countries are addressing DEI and what it reveals about progress in the U.S. France, for example, poses unique challenges for Black founders in its opaque venture landscape. On the other hand, the U.K. has made significant strides in funding for Black founders. Understanding the global perspective on DEI provides valuable insights into the progress being made.