For several years, Arian Simone, a Black woman and entrepreneur, tried to build out her business and get investors to support her. But the doors were slammed shut. Those who control venture capital funding, largely white men, failed to support her despite the large growth opportunity for her business.
Simone’s story, unfortunately, is not unique to women entrepreneurs — especially Black women who are trying to build and scale their businesses. The numbers are quite shocking: $288 billion in venture capital funding is disbursed each year, but only 0.036% goes to Black women. So, to combat that imbalance, Simone started her own company to help other women entrepreneurs who are facing the same problem. Last year, the same group of people who perpetuate this broken system tried to scare Simone and anyone else who would or could support her. They filed a lawsuit to shut her business down, but the lawsuit has settled, the Fearless Fund remains open for business and investors can continue to support Black and Brown businesses.
When we support women and under-represented entrepreneurs, we help our communities and bolster the broader economy. But the people who control the vast amount of the money have rejected a profitable future for everyone in favor of maintaining power and the broken status quo. The lawsuit against the Fearless Fund was a shot across the bow. It was a warning shot to anyone who supports equity, equal opportunity and investment in women or Black-owned businesses. And the goal was to scare people from investing and ultimately destroy businesses attempting to close the gaps created by centuries of disinvestment. But it failed.
After a year of litigation, the case is now dismissed with prejudice, which means that it cannot be brought again. Some headlines suggest that the settlement is a blow to efforts to remedy systemic inequities, but — as co-counsel on a team of incredibly gifted and strategic lawyers — I want to provide some clarification and insight into the meaningful victories we gained in this settlement agreement.
First, the settlement is a huge win for the Fearless Fund, because it does not limit or restrict how the Fearless Fund or Fearless Foundation can conduct business. From future investments and charitable giving, to mentorships and partnerships, the Fearless Fund and Fearless Foundation will be able to conduct business that furthers their mission to bridge the gap in venture capital funding for under-resourced communities, including women of color founders who are building their companies. This settlement does not affect any of their current or future programs. Rather, the settlement is strictly limited to one program that was already at its conclusion: a grant that was issued four times a year and was already in its last cycle. American Alliance for Equal Rights (AAER) and its cohorts wanted to use this lawsuit to completely restructure how the Fearless Fund, venture capitalists and charitable organizations operate — and failed. The Fearless Fund can continue to advance its work consistent with its mission.
Second, the settlement limits the application and reach of a misguided decision in the 11th Circuit Court that ignored existing law and precedent. As a threshold matter, charitable organizations have always held First Amendment protections to carry out work consistent with their missions — from the United Way to the Hebrew Free Burial Association. The Fearless Foundation is a charitable organization that empowers women of color entrepreneurs and other under-resourced groups to fight historic discrimination in access to capital. Two judges on the 11th Circuit ignored their own judicial precedent and tried to limit this principle as applied to the Fearless Fund case. By settling this matter at the preliminary injunction stage with no decision on the merits, the precedential value of the two-judge decision is substantially diminished, holding little to no impact, thereby allowing philanthropies around the country to continue operating consistent with their missions.
Third, we recognize that the current majority of the U.S. Supreme Court recently upended decades of jurisprudence — from reproductive rights and affirmative action to presidential immunity and voting rights — and this trend will likely continue. The majority appears ready and willing to defer to a political agenda rather than judicial precedent. We also understand that the rights of marginalized communities are under direct threat from advocates politically aligned with the Supreme Court majority who fear the future and want to maintain power by any means necessary. They will falsely claim that we live in a race-neutral world while acquiescing to or failing to rebut the fact that significant racial disparities exist. This settlement tactically avoids a nationwide court ruling that could have long-term, wide-ranging implications for policy and investments in and with Black and Brown founders all over the country.
The Fearless Fund and Fearless Foundation deftly navigated a complex terrain and ended up not only protecting themselves and their core mission and values but also everyone else who cares about equity. There is nothing in the settlement that changes the law. Nothing in the settlement restricts future programs. Nothing in the settlement restricts any for-profit or nonprofit organization from continuing to support Black and Brown founders, entrepreneurs and other under-resourced groups. This resolution empowers us to continue reaffirming our commitment to build a future where we all have the freedom to achieve and innovate.
Alphonso David is a civil rights attorney, co-counsel to the Fearless Fund and Fearless Foundation, and the president and chief executive officer of the Global Black Economic Forum.
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