Conservative legal strategist Edward Blum says it’s “unfair” that there’s a grant for black women small-business founders, a group who received 0.34 percentof allventure capitalfunds in 2021—less than one percent of the hundreds of billions given to start-ups each year. So Blum is suing to destroy the grant, ensuring black women receive even less than that teeny amount.
To that end, Blum has filed a lawsuit against Atlanta-based, black women-owned venture capital investment firm Fearless Fund over its Strivers Grant Contest, which limits eligibility for its $20,000 start-up grants to companies with at least 51 percent black woman ownership.
In court papers, Blum’s newest legal nonprofit—the American Alliance for Equal Rights—claims the Strivers grant is “a racially-discriminatory program” that violates Section 1981 of the Civil Rights Act of 1866. That law was passed one year after the Civil War to ensure formerly enslaved black folks could “make and enforce contracts…as is enjoyed by white citizens.”
Last Saturday, two Trump-appointed judges—Robert J. Luck and Andrew L. Brasher—out of a three-judge U.S. Circuit panel granted Blum’s request for an injunction against Fearless, ruling to overturn a lower court’s decision. The order means Fearless is prohibited from operating the Strivers grant contest or choosing a winner until an 11th Circuit court decides the case.
In his dissent, Clinton-appointed Judge Charles R. Wilson wrote that “it is a perversion of Congressional intent to use [the 1866 Civil Rights Act] against a remedial program whose purpose is to ‘bridge the gap in venture capital funding for women of color founders’—a gap that is the result of centuries of intentional racial discrimination.”
“The law Blum is using is remedial, meaning it’s meant to remedy [racial] discrimination that exists in society. Section 1981, in particular, was enacted during Reconstruction to give newly emancipated black Americans basic economic rights, so it is a race-conscious statute from the beginning,” Katy Youker, Economic Justice Project Director at the Lawyers’ Committee for Civil Rights Under Law, which filed an amicus brief in support of Fearless in the case, told me. “Fearless Fund is private. It doesn’t involve the use of public funds. It’s not a public contract, not a public program, not the government providing this money. These are black women who are choosing to come to the aid of other black women so they can access funding they are so often denied. As we say in our amicus brief and the recent 11th court dissent stated, it is a perversion to use a remedial statute to come after a remedial program like the Fearless Fund.”
Blum is already quite well-known for his many successful efforts to overturn laws that were drafted and enacted specifically to protect black Americans’ civil rights, especially those rights that black folks have been historically and unconstitutionally denied.
In 2013, Blum won a lawsuit that struck down key parts of the 1965 Voting Rights Act, allowing his fellow Republicans to pass racist laws that make it hard for black people to vote. Just this past June, he succeeded in his suit to eliminate race-conscious college admissions, a victory guaranteed to result in fewer black and Hispanic students attending and graduating from elite colleges. It would be irresponsible to not acknowledge the role conservatives on the Supreme Court have played in giving Blum their votes to advance his agenda.
Blum has stated that the courts are his chosen “vehicle” in his mission to both invert and overturn civil rights laws that protect black civil rights, which he claims are no longer necessary because “it is not white racism that plays the deciding role in the success of minorities anymore,” a fact Blum has says was “crystallized with the election of President Obama.”
In the post-racial fantasy of America that Blum inhabits, hard-fought civil rights laws are today “racial preferences” privileging black folks. Blum says his work is above all an effort toward the “restoration of [our] colorblind legal covenant.”
Let’s put aside the fact that it’s both brazenly disingenuous and ahistorical to declare that a document which literally protected white people’s right to enslave black human beings was somehow a “colorblind legal covenant.” Instead, let’s focus on Blum’s other brazenly disingenuous argument—often propagated by zero-sum-minded racists who believe a win for black folks is necessarily an “L” for white people—that by giving to Black women, Fearless Fund is basically just stealing from other folks.
Between 2018 and 2019, a study by Diversity VC found that 72 percent of business startups that received venture capital funding were led by white founders, across gender. The same study showed that nearly 90 percent of VC-backed companies were led by men. Conversely, per McKinsey, Black founders overall received just one percent of total start-up funds in 2022. McKinsey also found that venture capital funds that went specifically to women founders who are black and Latina—when tallied—equaled a measly 0.1 percent of dollars doled out by funders.
Even when Black entrepreneurs received VC money during the first five years of starting their businesses, they were given just “one-third” of the amount raised by other companies “formed in the same year, industry, and state,” according to a 2022 study from the National Bureau of Economic Research. (And yes, racist nerds, researchers controlled for various factors, such as the number of co-founders or where they attended college. They still concluded the biggest contributor to the funding gap was VC funders’ anti-black racial biases and stereotypes.)
After the 2020 wave of racial justice protests, there was an uptick in VC funds to Black-led businesses—though not nearly enough to close the funding chasm—but a CNBC investigation found that “a lot of those gains were lost by the end of 2022.” As “momentum around the movement fizzled and market conditions worsened,” VC funding dropped 36 percent across the board—but plunged a whopping 45 percent for black entrepreneurs.
Certainly, there are many funds that are earmarked for nonwhite, nonmale “diverse founders,” any one of which Blum could have chosen to sue. (Rolling Stone’s Tessa Stuart notes that “BBG Ventures invests exclusively in start-ups with at least one woman founder. Gold House Ventures supports Asian and Pacific Islander founders. L’Attitude Ventures focuses its funding on companies owned and led by U.S. Latinos.”) But a 2023 BBG Ventures report found that nearly 80 percent of those funds flowed to white women.
The lack of funding made available to black women has real consequences. Black business owners are twice as likely to be refused bank loans as their white peers, and a Stearns Bank study found Black women entrepreneurs “face a three times higher rejection rate than that of white business owners.” As a direct result of both racial and gender based discrimination, 61 percent of Black women fund their businesses with their own money, while just 47 percent of white women and 32 percent of white men do the same. That dearth of financial support is a huge part of why just three percent of companies started by black women survive past the crucial first five years.
To counter this environment of misogynoir-driven VC scarcity, Fearless Fund was established by three black women owners—former Cosby Show actress Keshia Knight Pulliam, Arian Simone, and Ayana Parsons. Since launching in 2019, Fearless has invested in black-women led brands that have gone onto huge success, including Slutty Vegan and the Lip Bar. They’ve also given more than 346 black-women led businesses grants totaling around $3 million.
That’s an infinitesimally small amount of the $241 billion dollars in VC money that went to founders last year. But it’s still too much for Blum!
As justification for his lawsuit, last month Blum told Atlanta magazine that “a useful way of determining the fairness, and, ultimately, the legality, of a policy is to apply the ‘shoe on the other foot’ test. 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 we all imagine our hardest, Blum suggests, we just might be able to envision an America in which a venture capital fund has a “requirement that only white men are eligible for its funding.” As if the numbers don’t prove that’s the exact unwritten policy of most VC funders, who make certain not to put it in writing because of the anti-discrimination laws that Blum opposes.
Blum gets real into colorblindness and what’s “fair and legal” when he thinks white people might be losing any ground, but if black people are clearly being discriminated against, not so much.
A voracious researcher who has told numerous outfits that he’s up every morning at 4:30 a.m., (“scrolling the internet and looking for someone to sue,” as The Washington Post’s Robert Barnes put it), Blum is surely aware that Black women are starting businesses faster than any other gender-racial group, with an increase of 146 percent since 2007, yet they consistently struggle to receive capital.
Before 2018, in the history of U.S. venture capital funding, just 34 Black women business launchers had ever raised $1 million or more in venture capital funds. And it took until 2021 for that number to hit 93.
Despite the obvious racial and gender discrimination in fundraising, black people denied VC money don’t wantonly file valid discrimination suits, often for a million reasons. It speaks volumes about Blum’s entitlement that he screams discrimination at every turn.
“The venture capital world is an area where you don’t see a lot of discrimination lawsuits from litigants of color because there’s a justified fear of retaliation and getting blacklisted,” Youker told me. “If you’re an entrepreneur trying to get money to start your small business, there’s a real fear that if you sue, you’ve just killed any chance of actually getting funding. So, this is a really offensive lawsuit on many levels—coming after a group who is exercising their right to provide money and give back to black women-led startups. I guess Ed Blum and his clients aren’t satisfied with having 99.6 percent of [venture capital] funding available to them.”
After he succeeded in ending race-conscious admissions, Blum threatened college administrators with “litigation” for not adhering to their “legal obligation to follow the letter and the spirit of the law.” But when black women are outpacing errryyybody on starting businesses but are still, collectively, only getting one-third of one percentage point in venture capital dollars, that doesn’t obviously violate both the “letter and the spirit” of so many anti-discrimination laws Blum is obsessed with?
Either Blum believes Black women founders are so innately undeserving of capital aid that the numbers make sense to him, or he thinks rampant discrimination in venture capitalism is okay as long as funders pretend otherwise—which, granted, is the American way.
In either case, maybe VC funds explicitly dedicated to black entrepreneurs (and other marginalized groups) should continue their work while hiding their true missions. As long as they toss a bone here and there to token white and/or male led companies—at the same percentage rates that most VC companies invest in “diverse” founders. Presumably, Blum should be cool with that.
If Blum truly cared about fairness, he’d be using the 1866 Civil Rights Act to call out the “white men [who] control 93 percent of the venture capital dollars” for refusing to fund anyone but people who look like them.
Instead, Blum is predictably attacking a small fund run by black women that has far less money than so many other players in the same arena.
That means Fearless is also less likely than bigger firms to have the funds for time-consuming and costly litigation. Blum, who is fond of portraying himself as a lone fighter, is actually bankrolled by rich rightwing supervillains including everyone from the Kochs and Federalist Society honcho Leonard Leo to the “dark money ATM,” Donors Trust. (I won’t bother to mention that Donors Trust has also given more than $1.5 million to the openly white supremacist outlets VDARE and American Renaissance, though I will drop the phrase “it’s the company you keep” right here for no particular reason.)
It’s not incidental that Blum chose Fearless and, presuming them defenseless, is hoping to get a court decision that will set a legal precedent for how VC dollars are doled out in perpetuity. As journalist Larry Smith quipped, “Blum is literally banking on the notion that he can get laws changed on the cheap.”
Look, I cannot definitively say that Blum is a bad-faith actor motivated by white racial grievance and an interest in preserving white supremacist hierarchy because of residual racial resentment resulting from his landslide loss to a black incumbent in a 1992 Texas congressional race. Most saliently, because he clearly isn’t shy about filing lawsuits and he might sue me (regardless of however frivolous such a suit would be). But also because it doesn’t actually matter what motivates Blum, or any other rightwing goons who swaddle their regressive actions in downey talk about colorblindness.
What matters are the outcomes, from black voter disenfranchisement to declines in black student college acceptance rates. (Blum’s quest for colorblind equality hasn’t left him the time to use the courts to do away with racial gerrymandering that favors white voters. “I have to prioritize what I do,” he told The Guardian when called out about it.)
The fact is, white racists and their abettors have been claiming racial equality laws were unnecessary and unfair to white people since slavery ended. (Really. In 1883, Supreme Court Justice Joseph Bradley, whining about the Civil Rights Act, wrote, “When a man has emerged from slavery, and, by the aid of beneficent legislation, has shaken off the inseparable concomitants of that state, there must be some stage in the progress of his elevation when he takes the rank of a mere citizen and ceases to be the special favorite of the laws.”)
They’re the same people who complain about black folks demanding government favoritism instead of self-reliance. But when black women create a DIY route to exactly that, they cry foul.
Fearless Fund, thankfully, has a stacked legal team that includes the NAACP Legal Defense Fund, Gibson Dunn & Crutcher, and noted attorney Ben Crump. And they seem ready for the fight.
“I grew up around Coretta Scott King, Rosa Parks, Juanita Abernathy, and Betty Shabazz. Activism is in our DNA. I’m the daughter of a mother who won the largest discrimination case in the state of Michigan,” Fearless Fund co-founder Arian Simone told assembled press in August, per Rolling Stone. “I’ve led protests for justice, against discrimination in my elementary school, as a 10 year old. We are not scared. We are fearless.”