October 29th 2023.
As Black entrepreneurs already face an uphill battle getting businesses off the ground, the issue of access to capital from investors is becoming increasingly difficult due to legal blocks from conservative groups. CNN recently reported on this worrying trend, which could stunt the progress made in diverse entrepreneurship, particularly in terms of investment and capital funding.
The American Alliance for Equal Rights (AAER) launched a legal challenge against the Fearless Fund, a venture capitalist firm dedicated to investing in the ideas of women of color. The federal appeals court granted the AAER motion, citing that the fund’s allocation of grants to Black and other women of color applicants violated the Civil Rights Act of 1866. The AAER was founded by Edward Blum, an individual known for his action against affirmative action in college admissions, as well as lawsuits against law firms’ diversity fellowships.
Blum stated that "our nation's civil rights laws do not permit racial distinctions" to twist the meaning of the legislation which was designed to protect certain groups. The Fearless Fund had previously awarded 20,000 grants to Black women business owners to help bring their ideas to life. Cathleen Trigg-Jones, one of the recipients of the grants, used her funding to launch her media company, iWoman TV, which focuses on putting women at the forefront.
“Every little bit helps when you’re a Black female trying to start from scratch to build a business in a world that is not designed to see you succeed,” Trigg-Jones told CNN about the fund’s impact on her business. “The barriers are expansive.”
While the risk of further legal action is concerning for many firms, there is still a need for diversity initiatives to reduce the racial wealth gap by providing support to entrepreneurs. Rashae Barnes, from Evals Equity, an investment fund for female entrepreneurs of color, expressed the need for an "equal playing field" for everyone.
Despite Blum's willingness to go to court, the Fearless Fund fortunately won the first round of the discrimination lawsuit, allowing them to continue their important work of providing grant funds to Black women business owners.
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