"Resignation of Fearless Fund's Founder Highlights Challenges Faced by Black Women in Venture Capital"

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Background on Fearless Fund

On Monday, Fearless Fund’s co-founder Ayana Parsons announced that she was stepping down from her leadership role at the firm. She will no longer be its general partner and COO but will be off "enjoying island life" with her family, as she mentioned in a LinkedIn post.

Mission and Impact of Fearless Fund

Fearless Fund was founded in 2019 by Parsons and her partner Arian Simone, who remains the firm’s CEO. The fund has a mission to provide venture capital financing, grants, and financial education to startups founded by Black women. This demographic is particularly underserved and promising, with less than 1% of all VC dollars in 2023 going to Black-founded startups. According to Crunchbase data, this amounts to around $661 million out of $136 billion.

Lawsuit Against Fearless Fund

However, the fund is facing a lawsuit from a politically conservative group called the American Alliance for Equal Rights (AAER). The AAER is challenging the fund’s right to provide $20,000 in small business grants to Black women, claiming that the program violates the Civil Rights Act of 1866. This act bans the use of race in contracts.

Background on AAER

The AAER was founded by Edward Blum, an activist who helped successfully overturn affirmative action in universities and is now conducting several other lawsuits in similar veins. The AAER is currently suing the Smithsonian Institute’s Latino Museum Studies Program for hiring Latino interns.

Impact of Lawsuit on Fearless Fund

The lawsuit has had a significant impact on Fearless Fund, with CEO Simone stating that the fund has lost nearly all its partnerships aside from two: JPMorgan and Costco. Even Mastercard, which sponsored the now-contested Strivers Grant, has publicly never commented on the lawsuit.

Shift in Tech Ecosystem

The support for anything considered DEI (Diversity, Equity, and Inclusion) has done a complete pendulum swing in tech in 2024, from its height in 2020 after the murder of George Floyd. Currently, it is more in vogue to publicly pan DEI and praise the so-called meritocracy.