Fearless Fund, a venture capitalist firm that invests in female entrepreneurs of color, has settled a discrimination lawsuit over a grant program specifically for Black women.
The lawsuit from the American Alliance for Equal Rights (AAER) claimed that the fund’s Fearless Strivers Grant Contest, which was open “only to Black females,” was discriminatory.
The grant program was at its end when the court case began in 2023, according to an online post by Fearless Fund founder Arian Simone, and the fund said it was motivated to avoid a court ruling so as not to lead to a Supreme Court decision that could end minority-based funding nationwide.
The Fearless Fund said it will continue to focus on “helping under-resourced entrepreneurs who have been ill served by traditional capital markets for far too long.” In a statement on the settlement, it announced a new $200 million debt fund with the goal of lending to more than 3,000 under-resourced founders.
Arian Simone (L) presents the Fearless Strivers New Orleans Grant onstage during the 2022 Essence Festival of Culture at the Ernest N. Morial Convention Center on July 1, 2022 in New Orleans.
Paras Griffin/Getty Images
Representatives of Fearless Fund partners Simone and Ayana Parson told reporters in August 2023 that the fund was established to address the wide gap in venture capital funding for businesses led by women of color “who confront barrier after barrier to obtain support and investments for their businesses.”
The Fearless Strivers Grant Contest was created specifically for Black women because Black women-owned businesses receive less than 1% of venture capital funding, according to the organization.
AAER called the grant program “divisive and illegal” and claimed that it “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.”
White women-founded companies take home 64% of “Diversity Investments” by deal count, meanwhile women of color-owned businesses only take home 10%, according to an analysis of Crunchbase data by venture capital firm BBG Ventures.
Fearless Fund partners have long defended their work, citing the poor representation of women of color among venture capital recipients and evidence of racial bias in the investment decisions of asset allocators.
“From the moment the lawsuit was filed, I pledged to stand firm in helping and empowering women of color entrepreneurs in need. I stand by that pledge today and in fact my commitment remains stronger than ever,” read a statement from the organization’s co-founder Arian Simone. “Our overarching mission remains focused on helping and empowering entrepreneurs who have been historically overlooked in the venture capital marketplace.”
AAER’s founder Edward Blum also leads the Students for Fair Admissions, the group that initiated the anti-affirmative action case that reached the Supreme Court and won the case, setting new limits on the use of race-based policies in college admissions.
The conservative group claimed that affirmative action, which was implemented to address racial inequities in access to higher education, violated the equal protection clause of the 14th Amendment.
ABC News’ Abigail Cruz and Sabina Ghebremedhin contributed to this report.
Fearless Fund, a venture capital firm dedicated to supporting women of color entrepreneurs, recently made headlines after announcing the discontinuation of a program specifically designed for Black women. This decision comes in the wake of a discrimination lawsuit settlement that the firm reached with a former employee who alleged racial bias and mistreatment.
The program, known as the Black Women’s Business Accelerator, was launched by Fearless Fund with the goal of providing funding and resources to Black women entrepreneurs looking to start or grow their businesses. However, the program came under scrutiny after a former employee filed a lawsuit against the firm, claiming that she was subjected to racial discrimination and harassment during her time at Fearless Fund.
In a statement released by Fearless Fund, the firm acknowledged the settlement of the discrimination lawsuit and expressed regret over the impact it had on the Black women entrepreneurs who were part of the program. The decision to discontinue the program was made in light of the negative publicity surrounding the lawsuit and the need to rebuild trust with the community.
While the discontinuation of the Black Women’s Business Accelerator is disappointing news for many aspiring Black women entrepreneurs, it also serves as a reminder of the ongoing challenges faced by women of color in the business world. Despite efforts to promote diversity and inclusion, instances of discrimination and bias still persist, making it difficult for marginalized groups to access the same opportunities as their white counterparts.
Moving forward, it is crucial for organizations like Fearless Fund to take proactive steps to address issues of diversity and inclusion within their own ranks. This includes implementing policies and practices that promote equity and fairness, as well as fostering a culture of respect and accountability.
In the meantime, Black women entrepreneurs who were part of the program are encouraged to seek out alternative sources of funding and support to help them achieve their business goals. There are a number of resources available, including other venture capital firms, accelerators, and networking groups that cater specifically to women of color.
Ultimately, the discontinuation of the Black Women’s Business Accelerator serves as a stark reminder of the work that still needs to be done to create a more inclusive and equitable business environment for all women, regardless of their race or background. It is a call to action for organizations to do better and ensure that all entrepreneurs have an equal opportunity to succeed.
