The Fortune Brainstorm Tech had 35 scheduled talks, interviews and discussions during their second annual conference in Park City over three days this week. Of those, just one 15-minute session, “A Different Kind of Equity in Venture Capital,” broached the subject of racial diversity in the tech world, itself a statemont on the lack of the very thing.
Venture capital is key to launching a startup through early-stage funding, and white males lead 92% of these private firms or funds.
For the co-founders of the Fearless Fund, a venture capital fund based in Atlanta, Ga., this lack of diversity in investors leads to a lack of diversity in investments. So in 2019, the Fearless Fund was created as the first venture capital fund built by women of color that solely invests in businesses founded by women of color.
Arian Simone, chief executive officer and founding partner of the Fearless Fund, spoke about their recent legal battles over affirmative action.
In August 2023, the Fearless Fund was sued by the American Alliance for Equal Rights, a nonprofit headed by Edward Blum, the legal strategist behind the Supreme Court case that prohibited affirmative action in college admissions. Chiefly, the lawsuit accuses the fund of racial discrimination.
The legal battle still continues, and Simone spoke in her interview during the conference at the Montage about the implications of this lawsuit as well as the necessity for a group like hers.
“We need more policies in place to protect the right to fund marginalized communities. And the reality is, it’s just good business,” she said. “When you cause disruption to access to capital, you’re causing disruptions to the U.S. economy as a whole.”
Pointing to the lack of diversity in the investor pool, she argued that the work of the Fearless Fund is designed to bridge this funding gap.
In 2022, venture capital firms invested $288 billion, and businesses founded by women of color received just 0.39% of that money, according to their website. Yet women of color make up over 20% of the U.S. population.
The world of venture capital is not equitable yet, Simone said, which is why groups like the Fearless Fund focus on funding that marginalized community. Before 2019, Black women entrepreneurs would raise $30,000 on average, “and we came on the scene cutting seven-figure checks,” Simone said.
That much money makes a huge impact, she said, and the implications of the legal battle with the American Alliance for Equal Rights is an attack on what she calls financial freedom, the ability to spend money however you want. Prohibiting the fund from financially supporting Black women will have negative impacts on the economy, she said.
“If you’re choosing to not support diversity, it’s alarming because are you trying to signal that your desire of oppression, of suppression, is greater than a desire to make money?” she said. “Diversity makes good money. Just plain and simple.”
Following the Supreme Court ruling against affirmative action in college admissions, Utah Gov. Spencer Cox signed the anti-diversity, equity and inclusion bill HB261 in January, which “prohibits the funding or maintenance of diversity, equity, and inclusion offices or officers in the system of higher education.” Since the implementation date, almost all Utah higher education schools have cut, dissolved or restructured their pre-existing diversity programs.
If this lawsuit between the Fearless Fund and the American Alliance for Equal Rights makes its way to the Supreme Court, the ruling could have similarly significant impacts in a historically red state like Utah.
Simone said her group is doing what they can in the ongoing legal fight because the implications are life changing.
“When race-based consciousness is removed, then race actually, especially with black and brown people, gets left behind. There has to be a level of awareness, there has to be a level of consciousness, there has to be a level of intentionality, in order to produce the results,” she said. “I actually desire the world that our plaintiffs desire, a world where race-conscious things don’t matter. We’re just not there yet.”