Legal Crossroads: The Fearless Fund's Battle and the Future of Venture Capital Equity

We are the manifestations of our ancestors' aspirations. We are “our ancestors’ wildest dreams” in the flesh. We are the culmination of the efforts of those who fought for women's rights, civil rights, and equality for all humanity to benefit from as citizens in our beloved country, the United States of America.

As Black business owners, we are not only witnessing an uptick in earnings but also gaining substantial influence and the power to amass generational wealth. Moreover, the corporate world is opening up avenues for collaboration through venture capital, grants, and sponsorships, unlocking unprecedented opportunities for us. This is truly an amazing time to be alive. So, this means that humanity is progressing, right??

As we make progress, we also encounter challenges. The Fearless Fund, an Atlanta-based venture capital firm founded by Arian Simone, Keshia Knight Pulliam, and Ayana Parsons, was launched in 2019 and invests in early-stage consumer and technology startups founded by women of color; is currently facing a legal battle.

The Fearless Fund is being sued by the American Alliance for Equal Rights (AAER) which is accusing them of racial discrimination in their grant program for Black female founders. The lawsuit claims Fearless Fund violates the Civil Rights Act of 1866 by only allowing Black women to participate in their grant competition. The lawsuit has been filed in federal court in Atlanta. If the AAER succeeds in its lawsuit, it could set a lasting precedent for how the entire startup ecosystem evolves and halt many efforts to address venture capital disparities. The co-founders, Arian Simone and Ayana Parsons, and their lawyers spoke publicly for the first time on CBS Mornings.

The grant in question is the Defendants, Fearless Strivers Grant Contest, which awards Black women who own small businesses $20,000 in grants, digital tools to help them grow their businesses, and mentorship opportunities provided in conjunction with Mastercard (one of the Freedom Fund’s many corporate partners).

Edward Blum, the founder of the American Alliance for Equal Rights, is a 71-year-old legal activist with a life-long mission ^“to eliminate race as a factor in all aspects of American law and life”. Blum is also the founder of Students for Fair Admissions, a group that recently won a Supreme Court case against Harvard and the University of North Carolina. This ruling effectively puts an end to race-based affirmative action policies in American college admissions.

On the heels of the Supreme Court's decision to reverse affirmative action, the nonprofit American Alliance for Equal Rights has set its sights on a woman-owned, minority-owned venture capital firm as its next adversary.

There is a concerning trend of court cases that aim to reverse historic civil rights legislation and entitlement programs that are based on race. For instance, the SBA’s 8(a) program is actively under attack, which has resulted in program suspension. On July 19, 2023, a court case, Ultima Servs. Corp. v. U.S. Dept. of Agriculture, was filed in the District Court of the Eastern District of Tennessee, issuing an injunction to stop using the rebuttal presumption to identify socially disadvantaged 8(a) applicants. The SBA historic civil rights set-aside known as 8a, for disadvantaged businesses, was accused by plaintiff, Celeste Bennett, a white woman, arguably due to her company being ineligible for the presumption. In court documents, Ultima claimed it lost out on opportunities for businesses in the program.

Another concerning case, currently in the news, is the recent lawsuit that was filed in Ohio in May 2023 against Progressive Insurance by Freedom Truck Dispatch. The Plaintiff, Nathan Roberts, a white man, alleges that Progressive discriminated against white, Asian, and Hispanic small-business owners, like Roberts, by offering a five-figure grant exclusively to 10 black-owned small businesses to purchase vehicles. The case was filed in Ohio federal court.

In a rapidly evolving society, we find ourselves at a pivotal crossroads where progress and challenges intersect. The strides we've made as a collective, standing on the shoulders of our ancestors' aspirations, are remarkable. However, this progress must be inclusive and equitable. Recent events, such as the legal disputes involving The Fearless Fund and other programs, underscore the complexity of addressing historical disparities while upholding principles of fairness and justice. To move forward, we must collectively advocate for a balanced approach that not only recognizes the need for targeted support for marginalized groups but also respects the principles of equality that underpin our society. It's a delicate balance that requires open dialogue, collaboration, and creative solutions that ensure everyone's aspirations are recognized and uplifted, propelling us toward a brighter and more just future for all.