The Fearless Fund, a venture capital initiative supporting Black women-owned businesses, has been ordered to halt its grant program by a divided U.S. appeals court. This decision aligns with an anti-affirmative action group that sued the fund.
The 11th U.S. Circuit Court of Appeals, based in Atlanta, found merit in the group’s discrimination lawsuit, overturning a lower court’s decision that had allowed the grant program to continue during the legal proceedings.
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This ruling marks a victory for Edward Blum, a conservative activist known for his successful U.S. Supreme Court challenge against race-conscious college admissions policies.
Blum’s organization, the American Alliance for Equal Rights, argued that the Fearless Fund violated a 19th-century federal law prohibiting racial discrimination in private contracts. The lawsuit specifically targeted the Fearless Fund’s program, which provides $20,000 grants and other resources to Black women entrepreneurs.
According to the Fearless Fund, Black women-owned businesses received less than 1% of the $288 billion invested by venture capital firms in 2022.
The appellate panel, led by Circuit Judge Kevin Newsom, a Trump appointee, determined that the Fearless Fund’s program did not qualify for speech protections under the First Amendment. Another Trump appointee, Judge Robert Luck, concurred with Newsom’s decision. However, Circuit Judge Robin Rosenbaum, appointed during the Obama administration, dissented, criticizing the plaintiffs for feigning harm from the grant program. The initiative had been suspended due to an earlier appellate court ruling.
Fearless Fund’s attorneys stated that Monday’s ruling contradicts over 150 years of civil rights jurisprudence and emphasized that this decision is not the final resolution of the case.
In January, the Fearless Fund argued that it had a constitutional right to advocate for the economic importance of Black women through its charitable activities. Blum, on Monday, reiterated that federal civil rights laws do not allow racial distinctions based on representation disparities across different sectors.
