On Monday, Fearless Fund’s co-founder Ayana Parsons announced that she was stepping down from her leadership role from the firm. She will no longer be its general partner and COO but will be off “enjoying island life” with her family, she said in a LinkedIn post. She co-founded the fund in 2019 with partner Arian Simone, who remains its CEO.
Fearless Fund was founded with a mission to provide venture capital financing, grants and financial education to startups founded by Black women. That’s a demographic that is both particularly underserved and promising. Less than 1% of all VC dollars in 2023 went to Black-founded startups, which amounts to around $661 million out of $136 billion, according to Crunchbase data.
So Fearless Fund is doing exactly what venture capitalists are supposed to do: find an overlooked area (in Silicon Valley they might call it taking a “contrarian view”) and invest. The fund has so far invested $26 million into over 40 companies that include Slutty Vegan, The Lip Bar, Partake Foods, and Live Tinted, Atlanta Daily World reports.
The money invested and granted is from private limited partners. The LPs who supported the fund want to support this thesis. The companies receiving money are still private startups. Since so little classic VC funding is going to these businesses, the community is building their own rails. Everyone in this ecosystem is OK with this.
Still, it is being sued by a politically conservative group called the American Alliance for Equal Rights (AAER) over its charitable grants program. AAER is challenging the fund’s right to provide $20,000 in small business grants to Black women, claiming the program violates the Civil Rights Act of 1866, which bans the use of race in contracts.
AAER was founded by Edward Blum, an activist who helped successfully overturn affirmative action in universities and is now conducting several other lawsuits in similar veins (e.g., the AAER is currently suing the Smithsonian Institute’s Latino Museum Studies Program for hiring Latino interns).
The case is not going particularly well for Fearless Fund. As TechCrunch recently reported, earlier this month an appeals court ruled against Fearless. It upheld a preliminary injunction that prevents the firm from making grants to Black women business owners. The firm told TechCrunch at that time it is weighing its options on how to proceed.
Last year, when the case made national news, numerous founders and investors told TechCrunch about the infuriating irony of using the Civil Rights Act of 1866 to protest the firm’s program, as it was initially put into place to help the formerly enslaved and is now being used against the community it sought to help.
In the months that followed, the frustration of this case within the community has not lessened. Earlier on Monday, Parsons had an emotional moment onstage at the ForbesBLK Summit in Atlanta. She was joined by political leader Stacey Abrams and the chief diversity officer of Congress, Dr. Sesha Joi Moon.
“Anytime you are surrounded by Black women, they are going to pour into you,’’ Parsons said, according to Forbes. “So, when I walked on this stage, these eyes were watering because they understood the heavy burden that is on all of us in this country.’’
After announcing her resignation, Parsons told The Atlanta Journal-Constitution and her spokesperson confirmed to TechCrunch that the lawsuit against Fearless was not a motivating factor. But she did not otherwise explain her decision to leave. She also remains an investor in the fund. “As co-founder, Ayana is still an investor and she has always had multiple ventures centered around inclusion leadership and development, venture capital, and entrepreneurship. Fearless Fund is merely one avenue in her pursuit to be an advocate for the marginalized,” her spokesperson said.
Parsons said in her LinkedIn post that she founded the firm “to help change the game for women of color entrepreneurs. And my rationale was simple: women of color are the most founded yet the least funded. They are starting businesses at a faster rate than any other demographic yet lack access to the capital, resources, education and networks needed to scale their businesses.”
She also promised not to give up on her goal. “I remain steadfast in my support of and commitment to the advancement of women of color,” she said in an emailed statement, mentioning that she’ll soon be publishing a book, too.
Still, as we previously pointed out, the sad fact is that big names in the tech ecosystem have not exactly come out swinging in support. CEO Simone told Inc. earlier this year that the fund had lost nearly all its partnerships aside from two, JPMorgan and Costco. Even Mastercard, which sponsored the now-contested Strivers Grant, has publicly never commented on the lawsuit.
Indeed, support for anything considered DEI has done a complete pendulum swing in tech in 2024, from its height in 2020 after the murder of George Floyd. Currently, it has become more in vogue to publicly pan DEI and praise the so-called meritocracy.
This story was updated to include statements from Parsons and her public relations representative.
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