According to the Associated Press, Atlanta, GA-based venture capital firm Fearless Fund “faced tough questions from conservative judges” on Wednesday, Jan. 31, as it fought for its grant program to further support Black-women-owned businesses.
As AFROTECH previously told you, Fearless Fund was hit with a lawsuit by Edward Blum and his American Alliance for Equal Rights (AAER) group in August 2023 on the basis that the fund was carrying out “explicit racial exclusion” and violated the Civil Rights Act of 1866.
A conservative-leaning panel that questioned Fearless Fund at a hearing in Miami, FL, will decide whether the grant will be suspended until the lawsuit is over.
In September 2023, another panel of the same court of appeals temporarily put the Strivers Grant Contest on hold. The move came after a lower court decided not to block the project.
Judge Kevin Newsom, appointed by former President Donald Trump, challenged the Fearless Fund’s claim that the First Amendment protects the grants as charitable donations. He also expressed skepticism about the Fearless Fund’s arguments that its grant programs are not discriminatory since it’s a minor player in venture funding, and business owners who didn’t qualify have many other options.
“The thing about that I just don’t think I either fully buy or understand is that it seems like, at its core, the premise of your argument is that, so long as there are lots of other sources of funding out there, are not discriminating on the basis of race, we can,” Newsom told the court.
Attorney for the Fearless Fund, Jason Schwartz, argued that charities can select the projects they want to fund according to the issues they are attempting to resolve.
“In the context of small giving, you can’t say it’s not remedial just because it’s not solving everyone’s problems,” Schwartz said, per the outlet. “The answer can’t possibly be given to everyone or no one.”
As a result of the Fearless Fund case, civil rights activists have argued that dismantling the program could threaten other donations or programs designed to assist underserved groups.
According to the nonprofit advocacy group digitalundivided, less than 1% of venture capital funding goes to businesses owned by Black and Hispanic women.
Fearless Fund funds the Strivers Grant Contest with the support of prominent companies such as J.P. Morgan Chase & Co., Bank of America, and Mastercard. However, Arian Simone, co-founder and CEO of the firm, revealed it has been having trouble securing new investments since the lawsuit was filed.
“When people hear lawsuits, sometimes the spirit of fear has gotten to them. So yes, we have been financially impacted by this lawsuit. We were looking for upwards of about eight figures of investments that fell through this past fall,” Simone said at a news conference following the hearing.