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A U.S. Federal Court of Appeals panel upheld the preliminary injunction against the Fearless Fund

June 13, 2024

In a recent ruling, a U.S. Federal Court of Appeals panel upheld the preliminary injunction against the Fearless Fund, preventing the organization from resuming operations of its Fearless Strivers Grant Contest, which awards winners with a cash prize and access to mentorship and business support services. Following on the heels of the U.S. Supreme Court decision ending Affirmative Action in college admissions (previously covered by SSTI here), this legal challenge tests whether private entities, like the Fearless Fund, can operate race-conscious funding programs without violating federal anti-discrimination laws.

The Fearless Fund, established in 2018, is an Atlanta-based venture capital firm focused on funding and supporting Black women entrepreneurs. Although the Fearless Strivers Grant Contest, launched in 2021 in partnership with Mastercard, is paused while the lawsuit is still active, work continues for the organization’s other projects.    

The contest came under legal scrutiny last year when the American Alliance for Equal Rights (AAER) filed a lawsuit alleging that the contest’s eligibility criteria violate the Civil Rights Act of 1866, which prohibits racial discrimination in contracts. In the court documents, AAER argues that the submissions to the grant contest serve as a contractual relationship between the contest’s applicants and the Fearless Fund, which restricts eligibility to businesses owned by Black women.

If the Fearless Fund does not appeal, the case will be sent back to trial court for a final ruling.  

Key events in the case include:

  • August 2023: AAER files a lawsuit and a request for a preliminary injunction with U.S. District Court for the Northern District of Georgia.
  • September 2023: The District Court initially denies the preliminary injunction, but this decision is reversed by the U.S. Court of Appeals for the 11th Circuit, leading to a halt in the Fearless Fund’s contest activities.
  • December 2023: The Fearless Fund asks the appeals court to reinstate the grant contest and uphold the initial ruling of the district court.
  • June 2024: The Appeals Court, after hearing arguments earlier this year, issues its ruling reaffirming the preliminary injunction. 

This article was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.

venture capital