But in an Instagram post Friday afternoon, Fearless Fund said, “We are fearless. We are Black women.”
“We are descendants of slaves. We represent women of color,” the post said. “We are in a position to provide economic opportunity and freedom to women of color and will continue to do that work.”
Venture capital funding for Black-owned startups is a fraction of what is invested in tech firms started by white-founders. The disparity is especially true for businesses founded by Black women.
Between 2009 and 2017, only 0.0006% of VC funding went to businesses started by Black women, according to nonprofit advocacy group Digitalundivided. Fearless Fund aims to help bridge the gap.
In 2021, record levels of funding for Latina and Black women improved things slightly. Their combined share of venture capital rose above 1% for the first time, according to the 2022 Project Diane report from Digitalundivided.
Fearless Fund has raised more than $25 million and invested in more than 40 companies over the past four years, including Slutty Vegan, Partake Foods, Live Tinted and The Lip Bar. In June, the firm announced it had received multi-million dollar follow-on investments from Bank of America, Costco and Mastercard.
But that’s a small drop in the bucket of VC funding nationally, which totaled more than $70 billion in 2023 alone, not including certain corporate investments, according to Crunchbase. Less than 1% of that sum has gone to Black-founded companies so far this year.
The Fearless Fund also runs a range of training and financing programs. This year, the firm announced its third annual Fearless Strivers Grant Contest in partnership with Mastercard. This contest is the program at the center of AAER’s lawsuit, though Mastercard is not named as a defendant.
Edward Blum, president of AAER, told The Atlanta Journal-Constitution that his group was first contacted by a woman-owned business asking for legal representation to challenge Fearless Fund. In total, three white and Asian women business owners are part of the lawsuit, alleging the Fearless Strivers Grant Contest is “racially exclusive, thus violating our nation’s civil rights laws,” Blum said.
Blum is also behind another group, Students for Fair Admissions, that successfully challenged affirmative action in college admissions policies.
In the lawsuit against Fearless Fund, Blum and his group are asking U.S. District Court Judge Thomas Thrash, Jr. to bar the VC firm from enforcing the racial eligibility criteria for the grant program and award the group damages, attorneys’ fees and “all other relief that AAER is entitled to.”
Blum said the hope is that other programs like Fearless Fund’s stop using race in eligibility criteria and that the issue won’t have to go to higher courts like the Supreme Court, but that it is always an option.
But some founders in Atlanta fear that the impact of the lawsuit will go beyond just individual programs and threaten all businesses that focus on Black people. Since learning of the suit, many in the city’s Black business community are showing support to Fearless Fund.
Ryan Wilson, CEO and co-founder of The Gathering Spot, a networking hub and co-working space, said he got a call from a member about hosting an event for the VC firm.
“My immediate response back to her was, ‘Let’s do it. We’ll rally the collective troops here,’” Wilson said.
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