VC firm Fearless Fund has faced another setback in its plans to issue grants to Black women business owners as the court has ruled against them.
On Monday, an appeals court for the 11th Circuit ruled against Fearless, upholding a preliminary injunction against their Strivers Grant program.
The court ruling said that the grant likely violates the Civil Rights Act of 1886, which bans the use of race in contracts.
What Has Happened So Far?
The American Alliance for Equal Rights (AAER), founded by Edward Blum, attacked the Fearless Fund in August 2023 after it claimed the fund’s Strivers Grant was racially discriminatory.
The Strivers Grant is issued through the fund’s foundation arm and awards $20,000 grants to businesses owned by Black women.
Blum, who was behind the Supreme Court’s affirmative action ruling, had accused the grant program of violating Section 1081 of the Civil Rights Act of 1886.
At the time, the US District, Thomas V. Thrash, initially ruled that Fearless Fund could continue offering the grant program. Still, a week later, a panel of federal judges temporarily blocked the program.
Fearless Fund then appealed the decision, and in February 2024, a conservative-leaning three-judge appeals panel heard both parties during an expedited hearing in Miami,
What Happens Now?
The appeals panel ruled 2-1 that allowing the $20,000 awards to be issued under the fund’s Fearless Strivers Grant Contest would be “substantially likely” to violate a federal statute prohibiting racial discrimination in contracts.
According to TechCrunch, Fearless is evaluating its options regarding what to do next, including the possibility of going to trial.
“America is supposed to be a nation where one has the freedom to achieve, the freedom to earn, and the freedom to prosper. Yet, when we have attempted to level the playing field for underrepresented groups, our freedoms were stifled,” Arian Simone, CEO of Fearless Fund wrote in a statement.
“We must keep up this fight for the next generation of girls who deserve to grow up in an America that lets them realize their dreams instead of outlawing them.”
The firm disagrees with the court ruling that the Strivers Grant violates the Civil Rights Act of 1866, the firm’s lawyer, Alphonso David, and president of the Global Black Economic Forum told TechCrunch in an emailed statement.
“As the dissenting judge pointed out, the discrimination in access to funding that Fearless Foundation seeks to address is long-standing and irrefutable,” David said.
“This is the first court decision in the 150-plus year history of the post-Civil War civil rights law that has halted private charitable support for any racial or ethnic group.”
Blum also emailed a statement saying, “The American Alliance for Equal Rights is grateful that the court has ruled that the Fearless Fund’s racially exclusive grant competition is illegal…”
