On Monday, Fearless Fund co-founder Ayana Parsons announced she is stepping down from her leadership role at the company. She will no longer be its general partner and COO, but will “enjoy island life” with her family, she told a LinkedIn post. He co-founded the fund in 2019 with partner Arian Simone, who remains its managing director.
The Fearless Fund was founded with a mission to provide venture capital funding, grants and financial education to startups founded by Black women. This is a demographic that is both highly underserved and promising. Less than 1% of all VC dollars in 2023 went to Black-founded startups, which amounts to about $661 million out of $136 billion, according to Crunchbase data.
So the Fearless Fund is doing exactly what venture capitalists are supposed to do: find an underserved area (in Silicon Valley (they can call it “contrarian”) and invest. The fund has so far invested $26 million to over 40 companies including Slutty Vegan, The Lip Bar, Partake Foods and Live Tinted; reports the Atlanta Daily World.
The money invested and granted comes from anonymous partners. LPs who supported the fund want to support this thesis. The companies that receive money are still private startups. Since so little classic VC funding goes into these businesses, the community builds its own rails. Everyone in this VC ecosystem is fine with that.
However, it is being sued by a politically conservative group called the American Alliance for Equal Rights (AAER) over its charitable subsidy program. AAER is challenging the fund’s right to provide $20,000 in small business grants to black women, arguing that the program violates the Civil Rights Act of 1866, which prohibits the use of race in contracts.
AAER was founded by Edward Bloom, an activist who helped successfully overturn affirmative action at universities and is now pursuing many other similar lawsuits. (For example, he is currently suing the Smithsonian Institution’s Latino Museum Studies Program for hiring Latino interns.)
The case is not going particularly well for the Fearless Fund. As TechCrunch recently reported, earlier this month an appeals court ruled against Fearless. It upheld a preliminary injunction preventing the company from awarding grants to black women business owners. The company told TechCrunch at the time that it was considering its options for how to move forward.
Last year, when the case made national news, several founders and investors told TechCrunch of the infuriating irony of using the Civil Rights Act of 1866 to protest the company’s program, which was originally put in place to help former slaves and now it is being used against the community it was trying to help.
In the months that followed, frustration over this case within the community did not diminish. Earlier Monday, Parsons had an emotional moment on stage at the ForbesBLK Summit in Atlanta. She was joined by political leader Stacey Abrams and the chief congressional diversity officer, Dr. Sesha Joi Moon.
“Whenever you’re surrounded by black women, they’re going to pour into you,” Parsons said. according to Forbes. “So when I walked on that stage, those eyes watered because they understood the heavy burden that rests on all of us in this country.”
After announcing her resignation, Parsons he told The Atlanta Journal-Constitution that the lawsuit against Fearless was not a motive, but did not otherwise explain her decision to leave. Fearless also did not immediately respond to TechCrunch’s request for comment.
Parsons simply said in her LinkedIn post that she founded the company “to help change the game for women entrepreneurs of color. And my reasoning was simple: women of color are the most established but also the least funded. They are starting businesses at a faster rate than any other demographic, but lack access to the capital, resources, education and networks they need to scale their businesses.”
She also promised not to give up on her goal. “Know that, in this next chapter of my never-ending story, I will be enjoying island life with my amazing family while continuing to fight for and embody FREEDOM.”
However, as we pointed out earlier, the sad fact is that big names in the tech ecosystem haven’t exactly come out in support. CEO Simone told Inc. earlier this year that the fund she had lost almost all her partnerships except for two, JPMorgan and Costco. Even Mastercard, which sponsored the now-disputed Strivers Grant, has never publicly commented on the lawsuit.
Indeed, support for anything considered DEI has made a complete pendulum swing in the technology in 2024, from its height in 2020 after the killing of George Floyd. Currently, the public pandemic of PPC and the glorification of the so-called “meritocracy” has become more fashionable.
