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Atlanta-based VC firm Fearless Fund heads back to court tomorrow as the legal battle over its grant funding for Black women-owned businesses continues. They will be at a federal courthouse in Miami on Wednesday morning to fight for their programming.
A three-judge panel of the Eleventh Circuit Court of Appeals will hear arguments from the plaintiffs – the American Alliance for Equal Rights (AAER), a conservative nonprofit – and the Fearless Fund legal team. The panel consists of two judges appointed by President Trump and one President Obama appointee.
The ongoing lawsuit filed by AAER in August 2023 alleged the fund’s Strivers Grant was racially discriminatory. As a result, a panel of judges issued a temporary injunction against the grant, meaning Fearless Fund is barred indefinitely from awarding it.
What is the Fearless Fund
Fearless Fund invests in women of color-led businesses seeking pre-seed, seed level, or series A financing. The fund is the nation’s first venture capital (VC) firm run by women of color that invests exclusively in tech and consumer-goods companies owned by women of color,
Led by Arian Simone and Ayana Parsons, Fearless Fund has enjoyed support from institutional investors such as J.P. Morgan Chase, Bank of America, Mastercard, Ally Bank, and more.
The Fund has championed economic empowerment and opportunity for women of color. Their flagship initiative, the Fearless Strivers Grant Contest, has provided substantial financial support to Black women entrepreneurs, with awards reaching up to $20,000.
Why The Racial Bias Lawsuit
The lawsuit was brought notably by Edward Blum, the conservative activist and founder of AAER, against Fearless Fund in August 2023. The lawsuit targeted the fund’s Fearless Strives Grant Contest, which awarded Black small-owned female businesses $20,000 in grants.
The lawsuit accused the program of violating Section 1081 of the Civil Rights Act of 1886, which bars racial bias in private contracts by opening its grant competition only to Black women.
Related Post: Court Blocks Fearless Fund From Awarding $20K Grants to Black Women Founders
After US District Judge Thomas V. Thrash ruled that Fearless Fund could continue offering the grant program only to Black women entrepreneurs, a week later, a panel of federal judges temporarily blocked the program.
They claimed it was ‘racially exclusionary’ and ‘substantially likely’ to violate a federal law prohibiting racial discrimination in contracting.
This reversed the previous judge’s ruling and temporarily prevented the Fearless Fund from running the Strivers Grant Contest.
Civil rights advocates stated that the legal action against Fearless Fund represents a broader trend of attempts to roll back advancements in racial diversity within the business sector.
Recent polling shows widespread support for businesses promoting racial diversity in America. The support is robust across different races, ideologies, and generations. It is also rooted in the belief that diversity drives greater profitability and innovation.
Fearless Fund’s Response and Appeal
The Atlanta, GA-based venture capital firm filed an appeal on December 11th according to AfroTech. “The Alliance seeks to enjoin a grant and mentorship program designed to ‘bridge the gap in venture capital funding’ that Black women entrepreneurs face due to historical discrimination,’ the appeal read.
The Fearless Fund also stated the AAER has distorted a Reconstruction-era civil rights law in an effort for the group to promote its ‘colorblind-at-all-costs viewpoint.’
“The Alliance opposes race-conscious remedial programs in all forms and exists for the sole purpose of attacking them in the courts,” Fearless Fund stated.
“Forcing the Foundation to adopt race-neutral criteria would disable the Foundation from conveying its message on the precise topic it seeks to address: economic disadvantages faced by Black women,” Fearless’ lawyers wrote.
What Are The Experts Saying?
Experts said the suit could present a pivotal moment in the ongoing discourse on race in the workplace.
Renowned civil rights advocate Ben Crump and others have vowed to combat Blum’s actions. He asserted that Blum severely underestimated the resilience of Fearless Fund. “Blum thought they would be the easiest ones to pick off. Oh, was he wrong,” Crump remarked.
Support for Fearless Fund’s cause extends to organizations like the NAACP Legal Defense Fund, the National Women’s Law Center, and the law firm Gibson, Dunn, and Crutcher.
Alphonso David, a civil rights attorney, president, and CEO of The Global Black Economic Forum, emphasized the undeniable inequality in today’s playing field.
“Today, the playing field is not level — beyond dispute,” said David. “Those targeting Fearless Fund want to propagate a system that privileges some and shuts out most. They want us to pretend that inequities do not exist. They want us to deny our history.”
On January 31, 2024, Fearless Fund will petition their case to overturn the court ruling before a three-judge panel in an expedited hearing in Miami.
