In their most recent decision, federal judges temporarily blocked the venture capital firm Fearless Fund from handing out grants to Black female entrepreneurs.
In a case initiated by the anti-affirmative action group The American Alliance for Equal Rights, the recent ruling will prevent the VC firm from handing out $20,000 in their grant competition.
With the temporary block on the firm’s aid to Black women, the success of the AAER’s attempt to argue that the grant discriminates against non-Black women may signify the increased “weaponization” of the Civil Rights Act of 1886 to prevent grants for Black entrepreneurs.
According to the court, the temporary block was allowed to go into effect because Judges Robert Luck and Andrew Brasher- both of whom were appointed by Donald Trump- argued that Fearless Fund’s grant was “racially exclusionary” based on Section 1981 of the Civil Rights Act of 1866.
Passed before Title VII, Section 1981 was included as part of the Civil Rights Act to prevent discrimination in contracts. In his dissent, Judge Charles Wilson pointed out that the section is being misused by the AAER as it was passed to help those who were formerly enslaved.
“AAER fails as an organization bringing a Section 1981 claim on behalf of white members,” said Judge Wilson in his dissent. “The inclusion of Asian business owners, while a racial minority, does not cure the inclusion of white business owners.”
The ability of the AAER to block venture capital for Black women also means increased difficulty for Black women entrepreneurs to obtain capital.
According to data shared by Richard Kerby, co-founder of VC fund Equal Ventures, 70% of venture capitalists are white and 82% are men. Just 2% of leaders who are handing out venture capital are Black men and only 1% are Black women.
For Black women, the lack of diversity and representation in venture capital fund firms means more difficulty trying to pitch projects to a majority of people who aren’t aware of the hurdles Black women face when trying to secure funds.
Although nearly $300 billion is spent on venture capital funds, Black women are still severely
underfunded by VC firms.
According to Crunchbase, only 0.34% of all total VC funds are given to Black women entrepreneurs. In 2021, only 93 Black women entrepreneurs were able to raise $1 million in support for their ideas.
Founder and CEO of Myya Jasmine Jones recalled the difficulty of securing funds for her company, a brand that provides post-mastectomy bras and breast forms for survivors before they became part of Fearless Fund’s portfolio.
“It was difficult because we have a business that impacts women who’ve had breast cancer. For many who haven’t experienced breast cancer, this is a problem that doesn’t exist,” Jones told The Hub News. “Fearless Fund knew, when I told them about the product that we offered, immediately about the opportunity that existed there and they were excited to lean in and invest in us.”
With the lack of funds, Crunchbase reports that one in four Black women entrepreneurs identify that two of the biggest hurdles they face when trying to secure financial support are a lack of mentorship and limited networks; according to a survey by LinkedIn, 58% of Black women entrepreneurs believe their businesses could grow more if they had better networks.
Black women-led VC firms, specifically, such as Fearless Fund, ensure that Black women entrepreneurs get the funding that they need while simultaneously offering them a community to expand their networks.
As Black women-led VC firms and VC geared towards aiding Black women entrepreneurs are attacked, Dr. Jones predicts that the lives of all women will be affected by rulings such as the recent decision.
“When these funds are paused and halted, it doesn’t only impact the lives of women of color. It impacts the lives of people across the nation who will not have the brilliant inventions and innovations in front of them because these businesses are lacking funding,” said Dr. Jones. “It’s a loss for us all as Americans.”
