The affirmative action fight has come to the business world, and Atlanta’s startup ecosystem is at the epicenter.
A lawsuit against Fearless Fund, a local fund that invests in women of color, was filed earlier in August by a nonprofit activist group central to the US Supreme Court case that struck down affirmative action in college admissions earlier this summer. The case, American Alliance for Equal Rights v. Fearless Fund, alleges that the fund’s $20,000 grants are racially discriminatory because they are awarded to Black women-owned businesses and startups.
Fearless Fund, its grant program, and its annual VC Summit have been woven into the fabric of the Atlanta startup scene since it got off the ground in 2019. With corporate backing from giants like Mastercard, Bank of America, and Costco, the team has raised $16 million so far towards its second fund, according to recent SEC filings.
Previous early-stage investment checks have gone to Southeast startups including Resilia, Villie, Travelsist, EnrichHER, CapWay, and Streamlytics.
The lawsuit has become a heated conversation for ecosystem leaders and startup founders in Atlanta and across the country.
“I was shocked, but I wasn’t surprised. Following similar cases in Texas and Tennessee combined with the SCOTUS ruling on college admissions, I believed those groups would look to dismantle support for underrepresented founders. I just didn’t think it would be this soon,” Goodie Nation founder and CEO Joey Womack told Hypepotamus. “I view this lawsuit, and similar lawsuits, as an effort to whitewash the decades of State-sponsored racial discrimination that generated the opportunity gaps Black communities are still working to overcome and to undo the progress many hard-working Americans have made over the last 10-15 years. This makes me feel as if we’re going back to the post-Reconstruction Era that led to Jim Crow laws and the rise of the Ku Klux Klan.”
The Community Engages
Goodie Nation, a national business support nonprofit for minority founders, set up an internal channel for its members to talk about the case and express their feelings. Petitions and calls for donations have been created to support Fearless Fund. Hundreds took to social media to share their thoughts, using the hashtag #fearlessfreedom.
“Appalled,” “disbelief,” and “this is about fear” were common digital refrains.
“This act seems like a complete regression in our collective journey towards progress and equality,” Jewel Walker, Goodie Nation’s Atlanta Ecosystem Builder Fellow, told Hypepotamus.
“My initial reaction was: some people don’t want us to have squat,” Atlanta-based entrepreneur James Oliver, Jr., told Hypepotamus on a video call. Oliver started Kabila, an inclusive co-founder matching app backed by Techstars. He’s also the founder of The ParentPrenuer Foundation, an organization providing grants to Black parent entrepreneurs. He said three years after the George Floyd Protests and the initial flood of support for Black-owned businesses and organizations, it’s now been harder for his organization to raise money. Now, he worries lawsuits like the one against The Fearless Fund could create an even bigger existential threat against organizations like his.
“I’m wondering, is somebody coming for me?”
Fearless Fund is one of several groups in Atlanta – like Goodie Nation, TechAF, the ParentPreneur Foundation, Techstars Founder Catalyst Program, Opportunity Hub (OHUB), the Russell Innovation Center for Entrepreneurs, and Zane Access – specifically focused on supporting women or minority-led startup ventures.
These organizations are looking to change the staggering statistics – Black founders take home less than 2% of the billions of venture capital dollars deployed each year, according to Crunchbase. Black female founders take home a fraction of that.
And that small number is falling drastically in 2023, with the most recent Crunchbase analysis showing that number hitting only 0.71% ($212 million out of $29 billion) in Q2.
Alongside the startup community’s reaction, Fearless Fund is fighting back. The fund has enlisted high profile civil rights lawyers for the coming lawsuit. CEO Arian Simones went on CBS last Thursday for her first interview about the lawsuit, saying that the fund will “continue to do the work” to support businesses run by women of color.
