Seated under a spotlight in a darkened room, Arian Simone is the main attraction.
It’s a Friday afternoon in September at the Brooklyn leg of AfroTech, one of those multicity networking events where people exchange personal QR codes and work their elevator pitches into conversation. Here in a sleek, modern minimalist hotel, about 125 mostly Black and under-50 internet-economy workers are gathered for what’s billed as a fireside chat with Simone, “Capital for a Cause.”
As co-founder and CEO of the Fearless Fund, the nation’s first venture-capital (VC) firm run by women of color that invests exclusively in tech and consumer-goods companies owned by women of color, Simone, 41, deploys some Mae West–level wit as she talks about her work and the disconnect between the fact that Black women are founding businesses at a higher rate than anyone else yet get an almost negligible share of VC investment. She mentions that Black- and Latino-owned firms deemed low-risk borrowers remain roughly half as likely as white-owned firms to see nonemergency bank-loan applications approved. And, she points out, the same Americans have the smallest number of personal contacts who can help them, as a young Donald Trump did, get started with “a small loan” or gift of $1 million from a parent.
The questions and commentary go on for about 20 minutes until finally Simone acknowledges the elephant in the room, the reason she and Fearless Fund general partner Ayana Parsons have had their summer and fall consumed by media appearances. The ReidOut With Joy Reid. CBS’s morning show. The View. Good Morning America. In January Simone debuted a new podcast Fearlessly Living With Arian Simone. They’ve been advised by the civil rights lawyer Ben Crump, among others, to reach as many people as they can.
“I have a question,” Simone says. “You all don’t want to talk about this crazy lawsuit that I’m in?”
On Aug. 2, the American Alliance for Equal Rights—an organization led by Edward Blum, the architect of the affirmative-action cases decided by the Supreme Court in June, in which the court struck down race-based college-admissions programs—filed a federal civil rights suit against the Fearless Fund, its management, and its nonprofit arm, the Fearless Foundation. It alleges that Fearless engages in racial discrimination by operating the Fearless Strivers Grant in which the foundation has awarded $10,000 to $20,000 and business-development services to early-stage Black-woman-owned businesses.
“Our nation’s civil rights laws do not permit racial distinctions because some racial groups are overrepresented in various endeavors, while others are underrepresented,” Blum told TIME in an emailed statement.
On Sept. 26, days after the AfroTech talk, a district court in Atlanta rebuffed the alliance’s request to temporarily halt Fearless’s program. Then, a few days later, a three-judge panel of the 11th Circuit Court of Appeals granted an injunction putting it on indefinite hold. On Jan. 31, another three-judge panel of the 11th Circuit will hear Fearless’s attempt to revive the Fearless Strivers program while the case continues at a lower level. Most legal experts expect the case to ultimately reach the Supreme Court.
While the amount of money at issue is relatively small, the case has potentially massive implications, and some of the ripple effects are already visible. The case is one of several brought in recent years by organizations connected to Blum or his ideological allies. But the volume has grown so rapidly since the Supreme Court’s college-admissions decision that while some minority- and woman-focused business organizations are facing active legal challenges, others have scrubbed their websites of explicit mentions of what they do to boost racial and gender diversity. A company offering grants to support minority economic advancement and inclusion asked a Black business-advocacy organization to replace the word “Black” in its application with “underrepresented populations.” Within months of being sued by the alliance over fellowship programs they operated for law students of color, many from groups severely underrepresented in the profession, three major law firms agreed to open their programs to all law students, and the cases were dropped. What’s developing has bolstered warnings that the Supreme Court’s ruling in the Harvard and University of North Carolina cases was only the beginning.
“We find ourselves in a curious moment,” says Damon T. Hewitt, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, a 60-year-old organization that has submitted an amicus brief in support of the Fearless Fund. “It’s one where everything and nothing has changed at the same time. The law–civil rights law–has not changed. What has is what some people are trying to do with it, then call that a defense of civil rights.”
Simone did not ask to be at the center of a major civil rights battle, but she has long understood what it means to engage. Born and raised in Detroit, she’s the daughter of a computer-engineer mother and a lawyer father who counted Rosa Parks among his clients. In the early 1990s, after Parks was robbed and beaten in her own home, Simone’s father was among the people who helped her move into a more secure apartment. It was Simone’s “job” to stop by after school to see if Parks needed anything.
“Just about every day she would say no, just some orange juice,” Simone says. “So I would get the juice from the store, and we would sit and talk. She was quite a lady, a lady, you hear me? Just this incredible human being.”
As the two talked, Simone learned what compelled Parks to take on the dangerous work of an NAACP sexual-assault investigator looking into cases involving Black women and girls typically ignored by police. She grasped the economic and social consequences Parks and her husband faced for the rest of their lives after Parks famously refused to abide by the segregated code of Montgomery, Ala.’s buses in 1955. And she got a sense of what a woman who will not be shamed, cowed, or broken sounds like, she says.
Years later, when she was a student at Florida A&M University, Simone set up a clothing shop in a Tallahassee mall. It was a struggle, in part, because she couldn’t find investors, she says. She remembers sitting on the floor before opening, promising herself she would find a way to be the solution, the investor, she had needed. After a short time in L.A. and a few years back in Detroit, Simone moved to Atlanta, where her PR business served that city’s small empire of musicians, producers, and others connected to the film industry. But that promise she made on the mall floor kept calling.
By 2017, Simone had come to see that America’s racialized economic hierarchy was among the things Martin Luther King Jr. seemed most concerned about in his final years. The early civil rights fight required what he described in the Nation in March 1966 as something uncomfortable but relatively easy for most of the country. But once legal changes were won, attention had to turn to correcting the things that would require Americans who had benefited from inequality to sacrifice. When some Americans are locked in industries that pay poverty wages, King wrote, others get rich. He argued that complicity must be faced and ended. Nearly 60 years later, all kinds of people in the U.S. experience odds of climbing above the economic station to which they were born far below that of many other developed countries. But, by one estimate, 70% of Black Americans born into the middle class are likely to fall out as adults.
In 2018, Simone created the Fearless Fund, work she describes as “civil rights 3.0.” “If you are concerned with justice, if you are a true believer, then you also have to be concerned with the economic standing of people of color in this country,” she says.
The world she entered, venture capital, is the second largest source of business funding in the U.S., and was instrumental in birthing such companies as Apple, Uber, Airbnb, and Tesla. Sebastian Mallaby, a senior fellow for international economics at the Council on Foreign Relations and author of The Power Law: Venture Capital and the Making of the New Future, estimates that of 10 companies backed by a VC firm, seven will fail and one or two will “make it big.” Most founders don’t have the personal assets that banks require for a business loan, so venture capitalists like to talk about their work as a “great equalizer,” he says. “Venture capital loves to say we support, we invest in the underdogs. What they mean by that is some 22-year-old with a radical idea. But there are different definitions of an underdog.”
The majority of VC’s accredited investors and industry staff, Mallaby explains, are white men. And people inside the industry rarely make funding decisions without calling someone they know, which often leaves them inside an all-white and -male loop that’s not that different from how most white Americans operate when it comes to all kinds of opportunities, analyses show. The result: just 2.4% of the VC industry’s billions went to companies founded by women of any race or ethnicity on average over the past 30 years, a 2019 Harvard University Kennedy School Women and Public Policy Program report found. Crunchbase, which analyzes VC and other industry data, found that 2020 was a growth year. Still, venture capital firms invested less than 0.35% of available money in companies founded by Black women. Investment in companies owned by both Black men and women combined slipped from 1.5% of available VC funds in 2021 to 1.1.% in 2022, according to Crunchbase.
In 2020, when George Floyd was murdered, the Fearless Fund had been raising money for their first fund, Fund I, for almost two years. Suddenly, Simone says, their phones were ringing off the hook. They ultimately raised $25.8 million, which they’ve invested in 36 companies including the restaurant chain Slutty Vegan, the cosmetics company The Lip Bar, and a digital platform for activists, COMMUNITYx.
But, now as the Fearless Fund tries to raise $100 million for Fund II, almost all of the proactive calls have stopped, Simone says. In fact, after the alliance filed suit, JPMorgan Chase & Co., one of Fund I’s major investors and a company that in 2021 produced a report saying Black women are the “fastest growing demographic of entrepreneurs in the U.S., but they face disproportionate financial headwinds,” informed Simone it would continue to invest in Fund I but would not invest in Fund II. For Simone, the bank’s decision was both surprising and disappointing, as repeat investment ranks among the signs of a VC fund’s health. She notes that while most of Fearless’s initial major investors have put money into Fund II because of the performance of Fund I, others declined to participate after JP Morgan Chase’s decision. JPMorgan Chase declined to comment when contacted by TIME, and Simone declined to describe how much money its choice may have cost Fund II, only saying that she and the team are working hard to raise it elsewhere and that they have made investments into eight additional companies with the early intake. After the lawsuit was filed, a separate arm of JPMorgan Chase, which controls philanthropic activity, did make a donation to the Fearless Foundation, Simone says.
What troubles Simone more is the unclear state of Fearless’s relationship with Mastercard, which launched the Fearless Strivers Grant program in partnership with the Fearless Fund in 2021, taking a role in drafting the rules for it and suggesting the timing of awards. Mastercard delivered its promised investment in Fund I and Fund II before the lawsuit was filed. However, the company has not offered financial support for the legal fight, and C-suite executives have stopped returning her calls, Simone says. “Commitment to this work can’t be conditional,” she says. The division of Mastercard that controls its efforts to increase financial inclusion fulfilled its commitment to the Fearless Foundation and the Strivers Grant with a contribution in January 2023, Simone says, but the foundation has not received a new round of funding in 2024. It’s difficult to know, however, if that’s simply because the lawsuit makes it impossible to distribute the funds to founders who apply for the Strivers program and Mastercard is waiting to see if the program can go forward or if the decision was made for another reason.
Mastercard, which the Alliance did not sue, declined to comment on what it described as “third-party litigation” and provided a statement in response to a list of questions sent by TIME: “Mastercard is a long-standing leader in financial inclusion. We are focused on empowering people by ensuring everyone can access, use and transact equitably, and participate sustainably in today’s digital economy. There is no change in the commitments we have made, including our support of small business owners, entrepreneurs and underserved communities … We are supporters of the Fearless Fund through our commitment to both Fund I and Fund II, and the grant initiatives on which our teams have engaged together.”
Simone would like to know more about what the commitments Mastercard describes will involve going forward. “Support in a situation like this is more than verbal,” she says.
As it turns out, someone at AfroTech does have a question about the lawsuit.
“Greetings,” says a tall Black man in a black suit and pristine sneakers who made a beeline for a microphone as soon as Simone raised the suit. “I feel the fund is attacking our culture, that it’s part of a secret war—you know we are all family here, so I am going to say it—between Black women and men. What is the plan for us to come together, for opportunities and resources for men?”
Most people here did not learn today that hard work and little sleep aren’t quite determinative of one’s economic fate. Yet in this exchange is the reality that the Fearless Fund is at the center of a civil rights lawsuit not just because of how it is trying to disrupt the usual determinants of access to business capital. It is also because of the kind of zero-sum logic that has found welcome residence among an outspoken variety of people who believe efforts to boost American inclusivity have or will cost them entirely too much.
Simone has heard this argument many times. In August, she, Parsons, and Crump stopped by The Breakfast Club, a radio show that, in 2020, entered what the Los Angeles Times described as the top tier of influential radio talk shows. It has 5.2 million monthly listeners and airs on more than 100 stations nationwide.
“Is it illegal to have a venture-capitalist fund that’s specific to a certain group?” asked DJ and host Charlamagne Tha God.
“No!” Parsons said. “Listen, our premise is that when you solve for the most marginalized, the most overlooked, the most underfunded, the most unsupported, that helps us all. That’s what this is about. And it’s economic freedom. So if we don’t exist, who is going to look out for us?”
But when a video of the interview is posted on Instagram, the comments reflect just how controversial the issue is. “Just swap black for white, if it feels wrong, then it probably is. Funny thing about laws … they apply to everyone no matter your skin color. Nobody special in this country,” one listener wrote. “So there’s no options for the brothers to get financing for generational wealth …” another chimed in.
“What’s being captured here is something significant,” says Samantha Tweedy, CEO of the Black Economic Alliance (BEA), a nonprofit and political action committee whose foundation filed an amicus brief in the case supporting the Fearless Fund. In fact, dozens of lawyers have attached their names to amicus briefs backing the alliance or the Fearless Fund in the case. “What we have to be careful of is to disaggregate the difference between well-organized, well-funded, and loud, and what people actually want in this country.”
Surveys have found substantial support for diversity, equity, and inclusion (DEI) initiatives in the workplace with some differences along race, gender, and ideological lines. In August, the BEA commissioned a Harris Poll, in which 78% of respondents told researchers they support businesses taking active steps to ensure companies reflect the diversity of the American population. This included 75% of white, 78% of Hispanic, and 88% of Black respondents. Still, the poll also surfaced deep delusion about how diverse the nation’s corporate leadership ranks are. Specifically, 37% of respondents estimated that 20% or more of Fortune 500 CEOs are Black. In reality, that share is closer to 2%. Exactly two Black women are among them.
These numbers do little to assuage those who express concerns about fundamental or legal fairness or believe something that rightfully belongs to them is being taken. And critics seem to have created enough traction that leading companies have retreated from their diversity efforts or at least begun to talk about them in different ways. At least seven states, including Texas and Florida, have restricted or banned DEI at public colleges and universities. Perhaps most prominently, the forced resignation of Claudine Gay, Harvard’s first Black president, followed a coordinated campaign led by the kind of loud and well-organized people Tweedy describes. “I’ve run the same playbook on critical race theory, on gender ideology, on DEI bureaucracy,” conservative activist Christopher Rufo told Politico. “For the time being, given the structure of our institutions, this is a universal strategy that can be applied by the right to most issues. I think that we’ve demonstrated that it can be successful.”
The Congressional Black Caucus’ Annual Legislative Conference, better known as Congressional Black Caucus (CBC) week, is an annual gathering with so many events that Washington, D.C., starts to look like it did before it became one of America’s most gentrified cities. While Simone is in New York in September, Parsons is scheduled to speak at something dubbed a National Town Hall, a press conference, and two panel discussions including one on diversity, equity, and inclusion.
Raised in Hot Springs, Ark., Parsons, 41, would have never guessed the word activist would appear near her name. She was a self-described studious introvert, who went to what she describes as a high school full of kids from hardworking families. But she never saw a Black doctor or lawyer in her hometown. She never saw a Black person leading a company. “The impact that has on your psyche is tremendous,” Parsons says.
After getting her M.B.A. at Florida A&M—where she knew of the popular Simone—Parsons took on sales and marketing work in corporate America, then moved into corporate strategy with an eye on a future Fortune 500 CEO role. In 2013, she became the global head of retail and consumer goods at the World Economic Forum. What Parsons noted at the forum’s annual gatherings in Davos, Switzerland, was there was a lot of talk and concern about gender parity, but race, she felt, did not get the same attention.
By 2016 Parsons, a married mother of two, was working sometimes 70- and 80-hour weeks, flying around the world and helping her husband co-found the country’s only Black-owned management-consulting firm. Three years later, it was all affecting her health. She took a job in executive recruiting trying to help companies diversify their boards and executive ranks. Then in 2019 she and her husband sat down for a meeting with Simone, which Parsons thought was going to be about investing in Fund I. It was. But Parsons’ husband also had an idea: Parsons should help raise and manage the fund. At first she thought adding another responsibility sounded insane. But Parsons, who continues her work in executive recruiting, soon agreed.
“This is about money,” she says onstage on CBC week. “This is about wealth creation. This is about the American Dream. And quite frankly what Ed Blum, who has sued the Fearless Fund, is trying to do is dismantle our economic freedom and our ability to ‘pull ourselves up by our bootstraps,’ and experience that which is the American Dream. So this is so much bigger than us. We need 1,000 Fearless Funds. But most importantly, we need access to capital.”
What Parsons doesn’t mention onstage is that some reporting has identified several organizations that contribute to conservative causes as major funders of Blum’s nonprofits. When I ask her later what it means to face off with well-funded people who have employed a long and, of late, successful legal strategy connected to this political ideology, Parsons—who, like Simone, is a PR professional’s on-message, talking-point-loving dream—rejects the idea. “Making money, lifting people out of poverty, the power of entrepreneurship to do all of that is the ultimate bipartisan issue,” she says.
Later that night, Parsons and I walk along The Wharf in Southwest D.C. “Ayana? Is that you, girl?” a Black woman named Tiffany Moore calls to her. “Tiffany?” Parsons says as she crosses the walkway to give Moore a hug.
“This is Ayana Parsons, with the Fearless Fund,” Moore says to a white man she’d been walking with.
“Oh, ohhh,” he says, communicating that he has some sense of the enormity of the case. “How are things going with the case?”
In the months since CBC Week, Parsons has stepped back from much of the public-facing work related to the litigation—she’s not the owner of the Fearless Fund, she has a full plate, and she and her family divide their time between Atlanta and a Caribbean island—but the case has continued to work its way through federal court.
It’s one of a number of lawsuits, Equal Employment Opportunity Commission complaints, and dispatched letters filed or sent by Blum; former Trump adviser Stephen Miller, who is probably best known for the Administration’s child-separation policy and now heads America First Legal; Republican attorneys general; or other nonprofits that claim corporate diversity and inclusion programs are now illegal.
“What is really going on,” says Katy Youker, director of the Economic Justice Project at the Lawyers’ Committee for Civil Rights Under Law, “is an attempt to earn political points and to gain political influence to roll back the racial progress that’s been had and made in the last 30 years, but especially the last few years since George Floyd’s murder.”
The alliance’s lawsuit argues that Fearless is violating a portion of the Civil Rights Act of 1866, the nation’s first civil rights law frequently referred to as Section 1981, which, among other things, bars race-conscious contracts. The latter was passed by Congress in an attempt to stop efforts to restrict the wages of the nation’s recently freed Black workers. But the alliance argues that it prohibits discrimination in all contracts and that the Strivers grant is a contest, and a type of contract. It claims that Fearless has changed the way it describes the program and adjusted the rules since the litigation began in an attempt to get around this issue. “No doubt Fearless would prefer that the statute permitted discrimination in favor of black women while barring discrimination against them. But it will have to convince Congress to make that change,” it wrote in a September filing. Its members—fewer than 80, according to court documents—will be irreparably harmed if the program for Black-women business owners moves forward, it claims. And, on Jan. 3, an alliance brief described the infinitesimal share of VC funding going to Black women as “virtually meaningless,” because Fearless has presented no information on how many made a rejected pitch.
“A useful way of determining the fairness, and, ultimately, the legality, of a policy is to apply the ‘shoe on the other foot’ test,” Blum said in an emailed statement. “In the case of the Fearless Fund, would a different venture capital fund’s requirement that only white men are eligible for its funding and support be fair and legal? If the answer is no, then it must follow in the law that racially exclusive policies that target a different race and sex must be unfair and illegal as well.”
Lawyers for Fearless argue that select private entities such as foundations can’t be compelled to spend their funds as directed by others, because this can be a protected form of expression. In this case, the Fearless Foundation accepts grant applications four times a year to address systemic funding disparities that hit Black women particularly hard and contribute to a cycle of unequal opportunity. Fearless’s lawyers have also argued the grants actually align with the goals of Section 1981: “The public has a strong interest in addressing manifest racial imbalances and encouraging expressive philanthropy; the grant program furthers these aims,” they wrote in one document. And they note that except in rare instances, precedent requires an organization suing on behalf of its members to name at least some of the individuals who have been harmed. When Thurgood Marshall argued 32 civil rights cases that ultimately went to the Supreme Court, including Brown v. Board of Education, he and his clients faced all manner of danger, including threats from the KKK, on at least one occasion a lynch mob, and on another the murder of a colleague. Still, all but one of those cases included a named party.
The alliance has put forth unnamed plaintiffs and says it can’t provide more information about them because of the risk of reprisals. According to a document filed with the district court, for Blum, the menacing communications have already begun. “A popular Instagram user, with nearly 200,000 followers, posted about this lawsuit—gratuitously adding rumored information about the city where I live and even the color of my house,” he wrote. (The Fearless Fund, its founders, and staff have also received a deluge of insulting and threatening messages.)
Should the Fearless case make it to the Supreme Court, the alliance would likely ask the conservative majority to decide that the nation’s civil rights laws don’t allow for race-targeted policy or practice to reduce inequality, says Richard Lempert, a distinguished university professor emeritus of law and sociology at the University of Michigan. In addition, he says, the alliance is leaning into the fact that the current court has rarely recognized racial-disparity data as evidence of discrimination. “They are trying to reimpose structural discrimination without saying that,” says Lempert, who has testified in multiple affirmative-action-related cases.
What’s more, if the court ultimately rules that DEI activity inside private companies or nonprofits cannot involve programs or policies open only to specific groups, the effects aren’t going to be limited to the Fearless Fund or the VC industry. An alliance victory could mean the end of everything from Korean American pooled business investment funds to college scholarships for the undocumented children of Mexican migrants. Then there’s the inconvenient fact that although many opponents of affirmative action and its offshoots describe them as “unfair advantages” for Black Americans, it’s white women who have benefited most. Access to venture capital has followed the same pattern. “This case,” Lempert says, “truly opens a very nasty can of worms.”
However, an alliance win is hardly a sure thing, Lempert says. Lower courts have been inconsistent in their responses to these cases. Plus, the high court has its own reputation to consider. Though it’s dominated by conservatives who have demonstrated a willingness to overhaul precedent, there are also liberals who object to where this takes us, and possibly both liberals and conservatives concerned about how much legitimacy the court maintains in the public’s eyes after its abortion decision and others, and ethics questions raised about Justices in recent years. And some Justices may opt to decide the narrower issues like standing and proof of harm, Lempert says, avoiding or at least delaying a more sweeping decision.
For many, wait-and-see is not an option. At a TIME event on Martha’s Vineyard in August, former Attorney General Eric Holder described the case as a potentially earth-shattering development for those concerned with questions of equity and fairness, diversity and inclusion in the U.S. DEI efforts are the processes, programs, and rules necessary to accomplish something that in the late 20th century was described as integration, Holder said.
“We see where the Supreme Court has gone with regard to affirmative action in higher education,” Holder said. “So now what will happen in another sector? Will we get into the fetal position, or will there be a robust response, to say, ‘not here’?”
The answer, Holder said, unequivocally has to be the latter.
The question at AfroTech, the one about the fund “attacking our culture,” causes Will Lucas, the brand manager onstage with Simone, to shake, then drop his head before looking to her to respond. She asks what precisely is the concern? The questioner says the Fearless Fund seems to be “chipping away” at resources, something “we need to make sure doesn’t happen.”
“Are you asking this question because the fund is focused on women?” Lucas interjects.
“Yes,” the man says, unleashing chatter, laughter, and other sounds of disdain in this room where about 60% of the audience appears to be Black women. Later, he tells me the question wasn’t well thought out but rooted in long-simmering concerns he’s had about the declining prospects of men, Black men in particular, and what that means for Black families and Black America.
But feelings are not facts. Worries that there is only so much venture capital to go around or that will ever be put into Black-owned businesses are not facts. There’s not a limited pool from which every VC investment in America is made. A fund is made up of however much money investors decide to put in. So Simone doesn’t respond by sharing the data on men of color seeking VC funding that’s made her believe that when it comes to business funding, sexism may be more potent than racism, or her strategy for raising Fund II. She doesn’t even tell him about the way her grandmother’s decision to listen in on investment conversations between her wealthy white employer and his wealthy white friends while working as a housemaid sent Simone’s mother to college debt-free. What she does is volley back a question.
“So, why haven’t you set up your own fund?”
