Court’s Ruling to Block the Fearless Fund’s Grant for Black Women Strikes “Close to Home”

The Lip Bar, a Detroit-based company the Fearless Fund has invested in, and The Skillman Foundation, comment on the recent ruling.
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Stock photograph by Katrin Bolovtsova, pexels.com

The Fearless Fund, the first venture capital firm in the U.S. founded by women of color for women of color, must suspend their grant program for Black women business owners following the U.S. Court of Appeals for the 11th Circuit’s ruling on June 3, according to reports from the Associated Press.

In the 2-1 ruling, the appeals court panel, consisting of two judges appointed by former President Donald Trump and one appointment by former President Barack Obama, found that the American Alliance for Equal Rights – a conservative group led by Edward Blum, the driving force behind the Supreme Court’s decision to end affirmative action in college admissions in 2023 — is likely to prevail in his lawsuit claiming the grant program violates section 1981 of the 1866 Civil Rights Act, which prohibits the use of race when awarding and enforcing contracts.

“The American Alliance for Equal Rights is grateful that the court has ruled that the Fearless Fund’s racially exclusive grant competition is illegal,” Blum said in a statement. “Our nation’s civil rights laws do not permit racial distinctions because some groups are overrepresented in various endeavors, while others are under-represented.”

However, Peter J. Hammer, Director of the Damon J. Keith Center for Civil Rights and professor of law at Wayne State University, sees the ruling differently. “The court invalidating the Fearless Fund is part of a larger trend where civil rights laws are being applied to further the ends of white supremacy,” Hammer told Hour Detroit. “The court strives mightily to stretch the law towards an unjust end, completely disregarding the historical context of the law and how it still must serve contemporary needs.”

Co-founded by Detroit native Arian Simone and Ayana Parsons in 2018 to address the gap in venture capital funding for women of color-led businesses, the Atlanta-based Fearless Fund has invested over $27 million in 44 companies, including The Lip Bar, a widely successful beauty brand based in Detroit.

“The Fearless Fund’s belief in our vision, shared connections, and funding have been instrumental in continuing to scale our business,” Melissa Butler, co-founder and CEO of The Lip Bar, told Hour Detroit in a statement. “Arian is a close friend, fellow Detroiter, college alum, sorority sister and an investor! These recent events have struck close to home, that our rights are being taken away at an alarming rate. It’s disheartening to bear witness to the idea that uplifting Black women is unconstitutional when Black women receive less than 1% of venture capital funding.”

In 2018, companies in the U.S. raised $130 billion in venture capital funding, but only 1% went toward businesses founded by women of color.

The Fearless Fund began investing in The Lip Bar in 2022, and since then, the company has expanded their footprint by 700% in Target stores across the country and opened their flagship location on Woodward Ave.

“The [over] $20 million investment barely scratches the surface of the vast wealth gap between Black people and their counterparts in this country,” Butler said. “This situation shows an attack on our ability to grow and build more businesses like The Lip Bar.”

The Skillman Foundation, as well as several other local organizations, like the Kresge Foundation and the Hudson-Webber Foundation, signed a letter in support of the joint amicus brief in December 2023, that called on the courts to dismiss the lawsuit and uphold the Fearless Fund’s First Amendment rights, as reported by Crain’s Detroit Business.

“The Skillman Foundation believes that every philanthropic entity has the right to invest social impact dollars the way they deem important, especially when so much evidence underscores the need to implement racial equity as an invaluable engine toward a more just and prosperous society,” Angelique Power, President & CEO of The Skillman Foundation, an organization dedicated to uplifting the lives of Detroit youth, told Hour Detroit in a statement.

“Ed[ward] Blum, the conservative activist, attempting to dictate how anyone in America chooses to invest their dollars will not only set back progress in a racially diverse republic, but he will also hamstring any donor anywhere,” Power said. “We are proud of our thoughtful approach, and we are ready to resist. We believe in a freedom to fund fearlessly and, we believe America’s public education system is worth it.”

According to the court’s order, the Fearless Fund must suspend its Strivers Grant Contest, which is open only to Black women-owned businesses that awards each winner $20,000, digital tools to assist with business growth, and mentorship, while the case continues to be litigated in a federal court in Atlanta. This is one of several grant programs provided through the capital firm’s charitable arm Fearless Foundation. So far, the foundation has given away almost 350 grants.

The recent ruling reversed a federal judge’s ruling in September 2023 that denied a preliminary injunction sought by the American Alliance for Equal Rights that would have blocked the Strivers Grant Contest. However, Blum challenged the federal judge’s original order, and the grant was temporarily blocked about a week later in October when a separate panel of the federal appeals court granted Blum’s request for an emergency injunction.