An appeals court has ordered a venture capital fund dedicated to providing capital to Black women business owners to cease providing assistance to WBEs following a lawsuit filed by White conservative activist Edward Blum.
The Fearless Fund, created by Arian Simone, Ayana Parsons, and “The Cosby Show” actress Keshia Knight Pulliam and is the first venture capital fund for women of color by women of color grants eligible women and business owners $20,000 in seed funding and growth financing.
The 11th Circuit Court of Appeals in Atlanta, Georgia, ordered the Fearless Fund to pause grant applications on Sept. 30 while the federal lawsuit filed by conservative activist Edward Blum is pending. Blum and his nonprofit American Alliance for Equal Rights claim that the Fearless Fund discriminates against white people.
Blum claims in his lawsuit that the fund violates the Civil Rights Act of 1866 because it is only eligible for women of color.
“The plaintiffs have established an irreparable injury,” read the ruling.
The Fearless Fund released a statement following the 2-1 decision, noting they disagreed with the ruling.
“We strongly disagree with the decision and remain resolute in our mission and commitment to address the unacceptable disparities that exist for Black women and other women of color in the venture capital space,” read the statement.
One of the attorneys for the Fearless Fund, Alphonso David, also shared a statement following the ruling.
“We respectfully disagree with this court’s decision, appreciate the important points raised by the dissent, and look forward to further appellate review,” said David. “We remain committed to defending the meaningful work of our clients.”
The Fearless Fund’s primary goal is to provide grants to businesses that are majority-owned (at least 51 percent) by Black women and women of color. This direct financial support aims to bridge the significant funding gap that exists for such businesses in the venture capital landscape. The statistic you mentioned, that less than one percent of total venture capital funding raised in 2018 went to businesses founded by women of color, highlights the urgent need for initiatives like The Fearless Fund to address this inequality and promote economic opportunities for underrepresented groups.
By working with legal and advocacy organizations like Ben Crump, Gibson Dunn & Crutcher, and the NAACP Legal Defense Fund, The Fearless Fund can leverage legal expertise, resources, and strategic advocacy to advance its mission and create positive change in the venture capital industry, thereby contributing to a more equitable entrepreneurial landscape for Black women and women of color.
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American Alliance for Equal Rights filed an emergency motion after U.S. District Judge Thomas Thrash denied their request for an injunction to stop the grants on Sept. 26. A three-judge panel with the 11th Circuit overturned the ruling 2 to 1.
The two judges who agreed with Blum called the Fearless Fund “racially exclusionary.” Another 11th Circuit panel will now rule on whether the injunction that blocks the grants will remain in place as the case is being litigated at the district court level.