The Fearless Fund, while a relatively small player in the global venture capital market, has come to symbolize the broader debate surrounding corporate diversity policies.
Senior U.S. Judge Thomas Thrash has ruled that the Fearless Fund, a venture capital firm based in Atlanta, can continue its grant program exclusively tailored for Black women entrepreneurs. The judge said the lawsuit challenging the practice, which argued it unlawfully excluded individuals of other races, was unlikely to succeed.
The Fearless Fund, while a relatively small player in the global venture capital market, has come to symbolize the broader debate surrounding corporate diversity policies. However, the lawsuit against the organization may set a precedent as discussions on race considerations evolve within the workplace, particularly in light of the U.S. Supreme Court’s recent ruling in June ending affirmative action in college admissions.
Edward Blum, an anti-affirmative action activist well-known for his involvement in the Supreme Court’s June college admissions cases, is the head of the nonprofit American Alliance for Equal Rights, which requested the preliminary injunction. Blum has expressed plans to appeal the decision, claiming that civil rights laws prohibit racial distinctions based on over representation or under representation.
The Fearless Strivers Grant Contest, which awards $20,000 to Black women entrepreneurs, remains at the center of the lawsuit. Blum argues that this contest violates a section of the Civil Rights Act of 1866, which prohibits racial discrimination in contracts. He claims that members outside the specified racial category are excluded.
Judge Thrash contended that the grants constituted “charitable donations” aimed, in part, at acknowledging the discrimination faced by Black women business owners. He asserted that such donations are protected as “expressive conduct” under the First Amendment. The judge criticized the alliance’s attempt to alter the fund’s intended message.
Gilbert Dickey, an attorney for the alliance, pointed out that the grant program does not extend to other racial minorities, including Hispanics. He argued that privileging one race over others violates First Amendment protection.
The Fearless Fund maintains that its objective is to remove the obstacles that keep companies run by women of color from getting venture capital funding. “We will continue to run the nation’s first venture capital fund that is built by women of color for women of color,” declared Fearless Fund CEO and co-founder Arian Simone.
“We realize there is still a long road ahead, but today we remain fearless and steadfast in creating pathways that empower women of color entrepreneurs.”
Data from the nonprofit advocacy group Digital Undivided shows that less than 1% of venture capital funding goes to businesses owned by Black and Hispanic women. Founded in 2019, the Fearless Fund conducts the grant contest quarterly, with eligibility criteria stipulating that a business must be at least 51% owned by a Black woman, among other requirements.
The NAACP Legal Defense Fund, the National Women’s Law Center, and the Gibson, Dunn, and Crutcher law firm have supported the Fearless Fund in fighting Blum’s lawsuit. Prominent figures, including civil rights advocate Ben Crump, have rallied to defend the Fearless Fund against allegations of discrimination.
The Fearless Fund has invested over $26.5 million in businesses run by women of color with the support of industry titans like J.P. Morgan Chase and Mastercard. They have also awarded grants exceeding $3 million to Black women-owned businesses.
Jason Schwartz, a partner at Gibson Dunn, stressed the importance of offering grants to Black women small business owners to achieve economic freedom. Alphonso David, another of the Fearless Fund’s lawyers, president, and CEO of the Global Black Economic Forum, condemned Blum’s claims as baseless attempts to subvert existing law. He affirmed their commitment to defend the Fearless Fund and its crucial work vigorously.
“Today, the playing field is not level – that is beyond dispute,” David asserted in an earlier statement. “Those targeting Fearless Fund want to propagate a system that privileges some and shuts out most. They want to pretend that inequities do not exist. They want us to deny our history.”