Fearless Fund is Shutting Down Contested Strivers Grant Program

Fearless Fund and American Alliance for Equal Rights Reach Settlement Agreement

The venture capital firm Fearless Fund and the American Alliance for Equal Rights (AAER) have entered into a settlement agreement that will see the firm shutting down its Strivers Grant program. The program, initially sponsored by Mastercard, aimed to provide $20,000 to small businesses owned by Black women.

Background on the Strivers Grant Program

The Strivers Grant was designed to address the significant disparity in funding and opportunities when it comes to accessing capital for Black founders. According to Crunchbase, Black founders raise less than 1% of all invested venture funding in any given year. In the first half of this year, they raised only 0.32% of all venture investment.

The program’s goal was to provide a financial boost to small businesses owned by Black women, who often face unique challenges in accessing capital. However, the AAER, run by conservative activist Edward Blum, filed a lawsuit against Fearless Fund alleging that the program discriminated against non-Black founders and violated the Civil Rights Act of 1866.

Court Ruling and Settlement Agreement

In June this year, a court ruled that Fearless Fund’s contract likely violated the Civil Rights Act, and upheld a preliminary injunction on the program. The AAER argued that the program’s focus on Black women was discriminatory and illegal.

As part of the settlement agreement, Fearless Fund has agreed to shut down the Strivers Grant program. In a statement sent to TechCrunch, Blum said, "The American Alliance for Equal Rights encouraged the Fearless Fund to open its grant contest to Hispanic, Asian, Native American, and white women, but [the firm] has decided instead to end it entirely."

Reaction from Fearless Fund’s CEO

In an emailed statement to TechCrunch, Fearless Fund’s CEO Arian Simone said, "The Fearless Fund and the Fearless Foundation are pleased to end the case and continue to focus on helping under-resourced entrepreneurs who have been ill-served by traditional capital markets for far too long."

Simone added that she stands firm in her commitment to helping women of color entrepreneurs in need. However, it is unclear how the settlement will impact Fearless Fund’s ability to provide grants to Black founders.

Impact on the Venture Industry

The closure of the Strivers Grant program is the latest blow to the diversity, equity, and inclusion movement this year. DEI tech foundations have shuttered, and companies are refocusing initiatives that once benefited minorities toward other avenues.

Conservative activists like Blum have been successful in suing away similar programs. Most notably, he helped end the use of race in college admissions, and his nonprofit, AAER, is currently suing other race-based programs, such as the Smithsonian Institute’s Latino Museum Studies Program for its focus on hiring Latino interns.

Loss of Partnerships

Simone said that Fearless Fund lost nearly all of its partnerships after the lawsuit came out. The firm used to offer other grants for businesses owned by women of color, but information on those grants is no longer available on its website.

Reaction from the Venture Industry

The venture industry has closely followed AAER’s lawsuit against Fearless Fund, with some investors and founders expressing their surprise that a civil rights act enacted to help the formerly enslaved was now being used against that very population.

This lawsuit aside, the landscape for Black founders remains difficult. The Strivers Grant program was designed to address this issue, but its closure will likely exacerbate the problem.

Conclusion

The settlement agreement between Fearless Fund and AAER marks a significant setback for diversity and inclusion efforts in the venture industry. The closure of the Strivers Grant program will undoubtedly have far-reaching consequences for Black founders and entrepreneurs who rely on such programs to access capital.

As the venture industry continues to grapple with issues of diversity and inclusion, it is essential that companies prioritize supporting under-resourced communities and promoting equity in all aspects of their business.

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