By Teri Williams
A source of funding for the fastest growing demographic of entrepreneurs in the country is under attack.
The Black-owned venture capital firm investing in women of color, Fearless Fund, is being sued for alleged “reverse discrimination.” Here is why and how we can fearlessly defend Black women entrepreneurs.
The lawsuit specifically addresses one of the Fearless Fund’s programs, Fearless Strivers Grant Contest, which awards $20,000 to Black women business owners. Their slogan “by women of color for women of color,” signals an unapologetic mission to serve and champion the innovative, necessary products and resources women of color create.
Women of color often do not have the funds, family means or friends to invest in their businesses. To combat this, Fearless Fund has proudly invested $26.5 million in 40 businesses and awarded $3 million to 346 grant recipients. The Fearless Fund is both a seed-stage venture capital fund and a nonprofit foundation.
Arian Simone, co-founder and CEO of Fearless Fund, has noted that its programs exist to directly challenge homophily, a social phenomenon where people have the tendency to seek out or be attracted to those who are like themselves. Power and wealth continue to be concentrated in white, male society.
According to TechCrunch, in 2022 women-founded startups raised 1.9% of all venture capital funds, dropping from 2.4% in 2021 and an all-time high of 2.8% in 2019. In 2021, Black women received 0.34% of the total venture capital spent in the U.S., a five-year high.
According to First Round Capital, the firm that completed a 10-year study, companies with female founders performed 63% better than all-male founding teams. A better track record of returns, but with dramatically less funding.
When diverse founders do get funding, Black women still lose. In August 2023, Forbes reported that 79% of seed funding went to white women. So even when diverse founders get funded, the funding rarely goes to Black founders.
That is why the Fearless Fund and other capital directed to companies founded by the Black community are so important. The “reverse discrimination” lawsuit can impact the few resources for capital that Black founders can tap.
The fight is not over, it’s just begun. Fearlessly, Black women confront barriers to entry by building a new path entirely. Many female founders, especially Black female founders are building solutions for our direct communities.
With most funds allocated by male asset managers and investors, they struggle to understand the gaps and opportunities women pitch.
Managers of venture funds understand their limitations and how initiatives like Fearless Fund can improve entrepreneurship in America. According to a recent Forbes article, 70 venture funds came together in solidarity to draft an open letter condemning the lawsuit. The letter adds to a rallying call felt across the industry and America more broadly to stand firm against attacks seeking to dismantle equity efforts.
We can all help Fearless Fund fight this “reverse discrimination” lawsuit by directly donate towards fighting the lawsuit by visiting https://fearlessfreedomnow.org.
Another form of fighting for Fearless Fund is by pushing for more diverse leadership. We need a sea change in the venture capital community, where serious capital is getting into the hands of diverse asset managers.
More diverse leaders may see the opportunities with Black women entrepreneurs that are overlooked.
Also, unlocking investors in the Black community can help change the dynamic. Once we secure our chest of tools to build generational wealth, we can invest more funds in the Black community.
Let’s put our dollars to work, expand opportunities and fund our community. Solidarity is required here from broader communities to defeat efforts to dismantle the work that diversity-focused funds have achieved despite impossible odds.
Let’s band together and show that no force is mightier than one united by a shared mission.
Teri Williams is the president and chief operating officer of One United Bank, the largest Black-owned bank in the United States.
Women of color often do not have the funds, family means or friends to invest in their businesses.