Fearless Fund, an Atlanta-based venture capital firm, has been ordered to temporarily pause grant applications supporting Black female founders during an ongoing lawsuit alleging racial discrimination.
On Saturday, September 30, the 11th Circuit Court of Appeals in Atlanta blocked the fund from continuing with its Fearless Strivers Grant Contest, which awards $20,000 investments to Black women entrepreneurs. The application was set to close on Saturday but must now remain open remain open until further order of the Court.
“We respectfully disagree with this Court’s decision. We appreciate the important points that have been raised by the dissenting judge in the case, and we look further to an appellate review of this matter,” Alphonso David, President and CEO of the Global Black Economic Forum and a lead attorney representing the organization, tells ESSENCE.
The lawsuit against the Fearless Fund represents a broader issue taking place, where seemingly politically motivated plaintiffs are challenging organizations that counter racial bias and advance equity, in this case, starting with underrepresented groups like Black women in the venture capital space.
Conservative group American Alliance for Equal Rights, started by Edward Blum, who helped overturn affirmative action, sued the organization in August, alleging their fund is racially discriminatory because it specifically caters to Black women. However, the fund aims to close the pervasive racial gap in venture capital funding. Businesses owned by Black women received less than 1% of the $288 billion that venture capital firms deployed in 2022.
Similar conservative groups have also targeted major corporations, including McDonald’s, Target, and Amazon, in moves widely seen as an attack on affirmative action programs in business.
“Everyone is trying to level the playing field, and they’re being challenged for doing so, and our clients are no different,” says David. “They are trying to address systemic bias and discrimination in the venture capital space, where Black women only receive 0.036% of the capital funding that’s issued, and we’re talking about billions of dollars allocated each year… They’re attempting to address that disparity.”
Fearless Fund co-founders Arian Simone and Ayana Parsons won earlier on September 26 when U.S. District Judge Thomas W. Thrash rejected Blum’s attempt at an injunction that would prevent the firm from exclusively awarding funds to Black women.
Judge Thrash concluded that under the U.S. Constitution’s First Amendment’s free speech protections, Fearless Fund had a right to express its belief in the importance of Black women to the economy through charity.
However, his ruling was overturned by a three-judge panel during an emergency motion filed. Two of the three circuit judges, Robert Luck and Andrew Brasher, who were appointed by former President Donald Trump, sided with Blum, according to Reuters. They argued that the fund was “substantially likely” to violate a federal anti-discrimination statute.
The dissenting judge, Charles R. Wilson, said, “It is a perversion of Congressional intent to use [the law] against a remedial program whose purpose is to ‘bridge the gap in venture capital funding for women of color founders’ — a gap that is the result of centuries of intentional racial discrimination.”
The Fearless Fund stands firm on its objective to remove the obstacles that keep companies run by women of color from getting venture capital funding.
With the help of industry titans like J.P. Morgan Chase and Mastercard, it has invested over $26.5 million in businesses owned by women of color. They have also given over $3 million in awards to Black women-owned businesses.
“If communities are not allowed to help themselves, sort of pull themselves up when we confront disparities, what are the solutions? What are the options?” David asks rhetorically. “We remain committed to defending the meaningful work of the Fearless Fund and The Fearless Foundation.”