Of the hundreds of billions of dollars in venture capital funds raised by American companies in recent years, less than one percent of that money has been allocated to businesses owned by Black women. When Black women ask VC funders for capital, they usually get told no. And on the off-chance they’re told yes, they usually get much less than they asked for: The 2021 Small Business Credit Survey showed that only 13 percent of Black-owned firms got all of the funding they requested, compared to 40 percent of white-owned firms. And 46 percent of Black-owned firms received nothing.
The level of startup capital a business has directly shapes its ability to succeed. Even though companies with more gender and ethnic diversity among their founders achieve 30 percent higher returns for investors than those founded by white men, diverse companies receive less than half as much funding as white guys’ companies, according to research conducted by McKinsey & Company. The denial of access to investment funds holds Black women and their businesses back: Only three percent of businesses owned by Black women survive past five years.
In order to bridge this enormous gap, around five years ago, a group of Black women entrepreneurs established the Fearless Fund—a venture capital firm that, in the words of the founders, aimed “to finally push the needle on the abysmal statistics” for businesses owned by women of color. Part of Fearless’s push was running a “Strivers Contest” that awarded $20,000 grants to a limited number of Black women-led businesses. For this offense, conservative legal activists set the Fearless Fund squarely in their sights, and sued in August 2023 to try and force Black businesswomen to stop trying to help other Black businesswomen.
Earlier this week, the two sides agreed to a resolution that shut down the Strivers program permanently. Fearless announced on Wednesday that it is launching a new fund available to “under-resourced” entrepreneurs instead.
The Fearless Fund is framing the settlement as a win. A divided panel of the Eleventh Circuit Court of Appeals had issued an order in June that blocked the Fund from administering the Strivers Contest during litigation, but now, thanks to the settlement, the case is dismissed. The glass half-empty view is: Black women don’t get Fearless’s dedicated grant anymore. The glass half-full view is: Conservatives don’t get a dangerous precedent in the Eleventh Circuit, either, or potentially something even worse: The Fund posted on Instagram that it “strategically avoided a Supreme Court ruling” that would have “ended minority based funding across the country.”
The Fund’s decision to end the case before it could reach the Supreme Court makes sense since it was the Supreme Court that got them into this mess in the first place. Last year, in a pair of cases together known as Students for Fair Admissions, the Court ruled that race-conscious college admissions programs are unconstitutional. Chief Justice John Roberts wrote for the majority that “eliminating racial discrimination means eliminating all of it,” erasing the distinction between inflicting racist harm and remedying racist harm. Conservatives accurately clocked the decision as an announcement that it was open season on any and all programs designed to address racial injustice.
The group that sued the Fearless Fund, the American Alliance for Equal Rights, is yet another vehicle engineered by serial litigator Ed Blum to challenge racial justice programs. Blum, who spearheaded the fight to end affirmative action as president of Students for Fair Admissions, is also president of the American Alliance for Equal Rights. Like SFFA and the other groups in Blum’s orbit, the Alliance is a well-funded, anonymous membership organization that popped up to push the conservative policy agenda through the courts. And just as Students for Fair Admissions argued that affirmative action violates the Constitution’s Equal Protection Clause, the American Alliance perversely used a bedrock racial justice law to target the victims of racial discrimination.
Ed Blum in 2022 (Photo by Shuran Huang for The Washington Post via Getty Images)
In its lawsuit, the Alliance argued that the Strivers program violated the 1866 Civil Rights Act, a Reconstruction-Era law that says that Americans have the right “to make or enforce contracts” free from racial discrimination. Congress passed the Act—the first federal civil rights law—in order to recognize newly freed Black people as citizens with rights equal to those of white citizens, and to outlaw the economic oppression of Black people, thus allowing them to freely participate in society.
Three members of the Alliance, who remained anonymous, swore in the lawsuit that they are women who own businesses and are “ready and able to apply” for a Strivers Grant, but are not eligible because they’re not Black, and that the program thus cannot survive scrutiny under Students for Fair Admissions. But it is also because they’re not Black that they have many other doors open to them. The point of programs like Strivers is that Black women entrepreneurs needed a new door because, solely by virtue of being Black women, the existing doors kept getting closed in their faces. The members of the American Alliance could have gone anywhere for funding. But they wanted one of the few dedicated sources available to Black women instead.
The point of the 1866 Civil Rights—and any law that aims to remediate the harms of racism—is not protecting amorphous white feelings. The point is to protect Black people from material harm and finally allow them to participate in the economy on a level playing field. Using a provision created in the wake of slavery to bar racial discrimination in business as a tool to prevent people from counteracting the racial discrimination Black women still face in business is a despicable perversion of law. The attack on the Fearless Fund sends a clear message: The conservative legal movement simply does not want Black women to have the opportunity to succeed, and it will use the courts to punish anyone who tries to make the world even slightly fairer.
