The Fearless Fight for Funding
Photo Credit: HYFIN
So, What Happened?
The Fearless Fund, a VC fund in Atlanta, permanently closed its grant contest in September after a year-long battle over a racial discrimination case. The fund aimed to bridge the gap in VC funding for women of color founders, but faced a complaint from the AAER nonprofit, claiming the grant program violated federal anti-discrimination laws.
The permanent closing of The Fearless Fund, a pioneering venture capital fund dedicated to supporting women of color entrepreneurs, not only speaks highly of the challenging climate of venture capital for this underrepresented group but also underscores the vital importance of creating safe spaces and thriving communities for these resilient women business owners. It is not only crucial to continue fostering these essential communities, but also to actively fight for their survival and growth. With The Fearless Fund's founder, Arian Simone, making the difficult decision to close the fund to avoid a potentially devastating court ruling that could jeopardize minority-based funding nationwide, it is painfully apparent the significant risks and obstacles faced by women of color in this field.
What’s The Impact
You may be asking, what does this mean for the future of women of color in venture capital? While the outcome of this case has initiated conversations amongst other venture capital firms about their Diversity, Equity, and Inclusivity tactics, it has not completely eliminated the conversation topic. If anything, it has sparked a new conversation on how to support minority businesses and protect them, ensuring that other funds and organizations will not have to face the same dilemma as The Fearless Fund.
Through the case, judges in these states decided that the Fearless Fund's grant program likely broke a law called Section 1981. Section 1981 of the Civil Rights Act of 1866 is a federal law that bans racial discrimination in contracts. Originally created to protect Black people after emancipation, it now applies to all races. The American Alliance for Equal Rights (AAER) sued Fearless Fund under this law, which requires the existence of a contract to make a claim. This claim could affect the states of Alabama, Florida, and Georgia, and it is important for venture capital in these states to understand how to move forward.
While this loss is a tremendous blow to the age-old fight for women of color business owners, it is not the end of the fight. It is important for all to not only be in the know about detrimental decisions and cases like this one but also to be openly speaking and communicating to ensure that the severity of this loss does not happen again.
We’ll discuss this, and more at this year’s brunch!