Venture capital firm Fearless Fund was founded in Atlanta by Black women. The firm invests in “under-resourced” businesses that are owned by women of color.
But Fearless recently agreed to cancel a small business grant contest for business owners who are female and Black after the American Alliance for Equal Rights – a conservative group – filed a discrimination lawsuit against the venture capital firm, The Atlanta Journal-Constitution reported. The settlement agreement, which was announced on Wednesday, comes a year after the lawsuit was filed.
The Alliance brought the lawsuit against Fearless and its foundation after the venture capital firm set aside a $20,000 grant for Black businesswomen. Alliance claimed the firm’s initiative was discriminatory toward non-Black entrepreneurs.
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The ruling in favor of the Alliance was made in the 11th U.S. Circuit Court of Appeals by two of three judges in a panel. The majority vote paved the way for the court to issue a preliminary injunction against Fearless’ grant.
“As of today, the Fearless Fund has permanently closed the grant contest and will never reopen it,” said the Alliance in a statement on Wednesday.
The well-known president of the Alliance, Edward Blum, also said the conservative group “encouraged the Fearless Fund to open its grant contest to Hispanic, Asian, Native American and white women but Fearless has decided instead to end it entirely.”
A joint motion to dismiss the case with prejudice was filed by Fearless and the Alliance on Wednesday, The Atlanta Journal-Constitution reported.
“From the moment the lawsuit was filed, I pledged to stand firm in helping and empowering women of color entrepreneurs in need,” Fearless Fund CEO and co-founder Arian Simone said in the statement.
“I stand by that pledge today and in fact my commitment remains stronger than ever. Our overarching mission remains focused on helping and empowering entrepreneurs who have been historically overlooked in the venture capital marketplace.”
Statistically, female founders of color have had access to just a tiny portion of venture capital investments. Fearless reported that only 0.39% of such investments were given to female founders of color in 2022. Other founders also receive significantly larger investments than Black entrepreneurs. Digitalundivided, which is a nonprofit advocacy group, reported that Black women who started businesses received just 0.0006% of venture capital funding between 2009 and 2017.
After the U.S. Supreme Court reversed the race-based affirmative action in college admissions in 2023, the Alliance filed several lawsuits against organizations or firms that support programs linked to corporate diversity, equity, and inclusion. And Fearless Fund was among the initial firms to be slapped with such lawsuits.
Blum was very outspoken about the scrapping of affirmative action, and he led the campaign to have it overturned by the Supreme Court. In the wake of the reversal, Blum and the Alliance moved to target private sector programs that implement DEI initiatives, per the Atlanta Journal-Constitution. The conservative group has since filed multiple lawsuits of such nature.
Responding to the settlement in a statement, one of Fearless’ lead lawyers said the agreement was a “positive outcome” for the contest.
“The parties agree that Fearless will cease operating the Strivers Grant Contest, which was already in its final stage. The agreement is very narrow and does not restrict or relate to any other investment or charitable activity of the Fearless Fund or the Foundation going forward,” Attorney Alphonso David said.
“The impact of resolving this matter is significant in that a decision by two judges on the 11th [C]ircuit will not bind the country. The Fearless Fund can now continue their work toward expanding economic opportunity.”
