Fearless Fund, the Atlanta-based venture capital firm started by Black women to invest in women of color, has agreed to end a small business grant contest for Black women business owners, ending a yearlong racial discrimination lawsuit.
The Fearless Fund and the conservative American Alliance for Equal Rights confirmed the settlement Wednesday morning.
On Aug. 2, 2023, the Alliance sued Fearless and its foundation over a $20,000 grant for Black female entrepreneurs, alleging it was discriminating against non-Black businesspeople.
In a 2-1 ruling in June, a three-judge 11th U.S. Circuit Court of Appeals panel ruled against Fearless and issued a preliminary injunction against the grant.
“As of today, the Fearless Fund has permanently closed the grant contest and will never reopen it,” the Alliance said in a statement Wednesday.
“The American Alliance for Equal Rights encouraged the Fearless Fund to open its grant contest to Hispanic, Asian, Native American and white women but Fearless has decided instead to end it entirely,” Edward Blum, the president of the Alliance, said in the statement.
The two parties filed a joint motion Wednesday morning to dismiss the case with prejudice.
Fearless Fund confirmed the settlement in a statement that did not reference terms.
“From the moment the lawsuit was filed, I pledged to stand firm in helping and empowering women of color entrepreneurs in need,” Fearless Fund CEO and co-founder Arian Simone said in the statement. “I stand by that pledge today and in fact my commitment remains stronger than ever. Our overarching mission remains focused on helping and empowering entrepreneurs who have been historically overlooked in the venture capital marketplace.”
In 2022, female founders of color received just 0.39% of all venture capital investments, according to Fearless. Historically, Black female entrepreneurs receive a fraction of what other founders get. Between 2009 and 2017, only 0.0006% of venture capital funding went to businesses started by Black women, according to nonprofit advocacy group Digitalundivided.
The lawsuit against Fearless Fund was one of the first filed against corporate diversity, equity and inclusion initiatives in the wake of the 2023 Supreme Court overturning affirmative action in college admissions.
Blum, the man behind the Alliance, was also behind the Supreme Court affirmative action case. After that victory, he set his sights on private sector programs.
After suing Fearless, the Alliance has since filed at least nine other lawsuits against companies such as Southwest Airlines, law firms and the governors of Minnesota and Alabama over race-conscious requirements in a variety of programs.
The Alliance has dropped some of the lawsuits after defendants agreed to change the eligibility requirements of their programs.
Alphonso David, one of the lead lawyers for Fearless in this case, said in a statement the settlement was “a positive outcome” for the fund.
“The parties agree that Fearless will cease operating the Strivers Grant Contest, which was already in its final stage. The agreement is very narrow and does not restrict or relate to any other investment or charitable activity of the Fearless Fund or the Foundation going forward,” David said. “The impact of resolving this matter is significant in that a decision by two judges on the 11th [C]ircuit will not bind the country. The Fearless Fund can now continue their work toward expanding economic opportunity.”
—This is a developing story, please return to AJC.com for updates.
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