An appeals court this week blocked Fearless Fund — an Atlanta-based venture capital firm that supports women of color businesses —- from distributing $20,000 in grants to Black women business owners.
The ruling from the 11th Circuit U.S. Court of Appeals comes after conservative activist Edward Blum filed a lawsuit against the organization last year alleging its grant program is discriminatory. According to the New York Times, Blum also worked for years to overturn affirmative action.
As a result of the ruling, the fund is prohibited from distributing grants during the case’s litigation, a move that Arian Simone, the venture capital firm’s CEO and cofounder, calls “devastating.”
“ I am shattered for every girl of color who has a dream but will grow up in a nation determined not to give her a shot to live it,” Simone said in a statement to USA Today. “On their behalf, we will turn the pain into purpose and fight with all our might.”
Following the ruling, Black leaders like Rev. Al Sharpton and NAACP President Derrick Johnson released statements criticizing the court’s decision.
“DEI is the future,” Johnson wrote on Twitter. “The NAACP strongly disagrees with the notion that organizations seeking to close the racial wealth gap are discriminatory.”
“We support Arian Simone and the impactful work she’s doing with the Fearless Fund,” he added.
Situations like these prove to be even more disappointing since tremendous disparities exist for women and women of color in the venture capital fund world. According to previous data published by the capital marketing company Pitchbook, all-women startup teams in the U.S. received only $4.5 billion out of $238.3 billion (1.9%) in allocated venture capital during 2022. And women of color received even less — only 0.39%. At the end of 2022, Black entrepreneurs saw a 45% decrease in funding, the data finds.
While women of color accounted for 64% of new women-led organizations, implicit bias in investment decisions often favor those who fit certain stereotypes, such as being white and male, Women Who Code reports.
Research shows that women-owned businesses bring great assets to the economy. Recent data from NerdWallet reveals that women-owned businesses in the U.S. generate $1.8 trillion each year. It also found that women-owned businesses added 500,000 jobs in the U.S. between 1997 and 2007.
Despite having to deal with bias and other challenges, women of color entrepreneurs are still booming. Additional data from NerdWallet shows during 2007 to 2012, businesses owned by Latina women grew more than 87%. And between 2017 to 2020, the amount of Black women-owned businesses increased by almost 20%, CNBC recently reported.
For reasons such as these, it’s why women like Simone say their mission is to support women of color entrepreneurs, even if others, like Blum or the panel on the federal appeals court, disagree.
“Whatever it is that is burning in your heart, you do that,” Simone told the women’s news platform Her Agenda in 2014.
