Fearless Fund, the Atlanta-based venture capital firm founded by Black women to support women of color in business, has reached a settlement in a yearlong racial discrimination lawsuit, agreeing to end a small business grant contest specifically for Black women business owners. The conservative American Alliance for Equal Rights and the Fearless Fund confirmed the settlement on Wednesday.

The lawsuit, filed by the American Alliance for Equal Rights on August 2, 2023, alleged that Fearless Fund's $20,000 grant for Black female entrepreneurs was discriminatory towards non-Black businesspeople. In June, a three-judge panel from the 11th U.S. Circuit Court of Appeals ruled against Fearless Fund and issued a preliminary injunction against the grant, leading to the end of the contest.

In a statement, the Alliance stated, "As of today, the Fearless Fund has permanently closed the grant contest and will never reopen it." Edward Blum, the president of the Alliance, expressed disappointment, stating that they had encouraged Fearless Fund to open the grant contest to Hispanic, Asian, Native American, and white women, but the fund decided to end it entirely instead.

Both parties filed a joint motion on Wednesday morning to dismiss the case with prejudice. The settlement's specific terms were not mentioned in Fearless Fund's confirmation statement, which emphasized their commitment to empowering women of color entrepreneurs who have been historically overlooked in the venture capital marketplace.

Fearless Fund CEO and co-founder, Arian Simone, said, "From the moment the lawsuit was filed, I pledged to stand firm in helping and empowering women of color entrepreneurs in need. I stand by that pledge today, and in fact, my commitment remains stronger than ever. Our overarching mission remains focused on helping and empowering entrepreneurs who have been historically overlooked in the venture capital marketplace."

The lawsuit against Fearless Fund marked one of the first legal challenges against corporate diversity, equity, and inclusion initiatives following the Supreme Court's overturning of affirmative action in college admissions in 2023. Edward Blum, the president of the Alliance, who was also involved in the Supreme Court affirmative action case, turned his attention to private sector programs after that victory.

Following the Fearless Fund lawsuit, the Alliance filed nine other lawsuits against companies such as Southwest Airlines, law firms, and the governors of Minnesota and Alabama over race-conscious requirements in various programs. Some of these lawsuits were dropped after defendants agreed to revise their programs' eligibility requirements.

Alphonso David, one of Fearless Fund's lead lawyers in the case, stated that the settlement was a positive outcome for the fund. "The parties agree that Fearless will cease operating the Strivers Grant Contest, which was already in its final stage," David said. He also emphasized that the agreement does not restrict or relate to any other investment or charitable activity of the Fearless Fund or Foundation going forward.

The impact of resolving this matter goes beyond Fearless Fund, as it means that the decision by two judges on the 11th Circuit will not have a binding effect on the rest of the country. With the settlement, Fearless Fund can continue their mission of expanding economic opportunity for underrepresented entrepreneurs.