Venture Capital: Federal Court Halts Support To Black Female Founders By VC Firm Fearless Fund

The court said the Fearless Fund VC program was of a “racially exclusionary” nature and could potentially breach federal anti-discrimination legislation.

A federal appellate panel from the U.S. Court of Appeals for the 11th Circuit has issued a temporary injunction preventing an Atlanta-based venture fund from granting $20,000 awards exclusively to Black female entrepreneurs. They argued that this program exhibited “racial exclusion” and might violate federal anti-discrimination laws in contracting.

This decision overrules a prior ruling by U.S. District Judge Thomas W. Thrash, who had denied the American Alliance for Equal Rights’ request to halt the grant awards. This conservative group, led by Edward Blum, filed a lawsuit in August, asserting that the program was discriminatory. (The Washington Post)

The Fearless Fund, a private entity, faced the alliance’s lawsuit for offering grants exclusively to Black female business owners. This lawsuit followed U.S. Supreme Court decisions, initiated by Blum, which effectively prohibited race-conscious college admissions at institutions like Harvard and the University of North Carolina.

Blum expressed satisfaction with the 11th Circuit’s decision, anticipating a resolution of the lawsuit in their favor.

Another 11th Circuit panel will decide whether the Fearless Fund can continue granting funds under its Fearless Strivers Grant Contest during ongoing district court litigation. Saturday’s order temporarily suspends the grant process, with an uncertain timeline for the separate panel’s decision.

The legal dispute centers on whether the Fearless Fund’s exclusive support for Black women is protected as charitable giving under the First Amendment or constitutes illegal discrimination. Judges Robert J. Luck and Andrew L. Brasher, appointed by President Donald Trump, found that the plaintiffs demonstrated a substantial likelihood of legal violation if the grants continued exclusively for Black women.

However, in a dissenting opinion, Judge Charles R. Wilson, a Clinton appointee, disagreed, arguing that using the Civil Rights Act of 1866 against a program addressing historical racial discrimination in venture capital funding was a misinterpretation of Congressional intent.

Additionally, the Blum-led alliance sued two law firms, Perkins Coie and Morrison & Foerster, in August, alleging racial discrimination in their diversity fellowships for law students.

Related Story:  Square And Social Change Fund United Launch Accelerator For Black and Latino Entrepreneurs

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