Fearless Fund, an Atlanta-based venture capital fund, has agreed to end a program that awarded grants to small businesses run by Black women to settle a 2023 lawsuit filed in federal court by the nonprofit American Alliance for Equal Rights (AAER).

Fearless Fund agreed to settle the case after a federal appeals court in June sided with AAER, ruling that the fund’s Fearless Strivers Grant Contest likely violated a Civil War-era law barring racial discrimination in contracting. The program awarded six Black women who own small companies $20,000 in grants and other resources to expand their businesses.

“Race-exclusive programs like the one the Fearless Fund promoted are divisive and illegal,” said Edward Blum, president of AAER—which Reuters described as an “anti-affirmative action group.”

According to the Associated Press, conservative activists, bolstered by the recent Supreme Court case that ended affirmative action in college admissions, have targeted dozens of companies and government institutions and challenged a wide array of programs and policies bolstering diversity, equity, and inclusion.

“We strategically avoided a Supreme Court ruling…because a ruling not in our favor at the Supreme Court would’ve ended minority-based funding across the country,” Fearless Fund CEO Arian Simone wrote in a statement posted to Facebook.

According to the fund—which counts JPMorgan Chase, Bank of America, and MasterCard among its investors—businesses owned by Black women in 2022 received less than 1 percent of the $288 billion deployed by venture capital firms. The Fearless Fund has invested nearly $27 million in 40 startups led by women of color since 2019.

The fund also described the settlement as a “WIN and positive outcome for the Fearless Fund and our community,” noting that the settlement affected only the Fearless Strivers Grant Contest, which had already ended operations. “The one grant program the U.S. appeals courts stopped was funding six entrepreneurs, [while our] new program will touch over 3,000 entrepreneurs. That sounds like a WIN to me.”

(Photo credit: Getty Images/Delmaine Donson)