Firms face financial woes, conduct layoffs due to litigation targeting DEI-based grants: Report

 The boss of a venture firm said Thursday he had to scale back his company's operations and grant programs after being hit with lawsuits from conservative groups.

Ariane Simon, CEO of the Atlanta-based Fearless Fund, told Inc. in an interview that conservatives' efforts to weaken grant programs for women of color are moving forward, causing her organization to fall apart.

Since the beginning of the Fearless Strivers Grant Competition, Simone, with the help of partner corporations, has been able to award $3.7 million in grants to business owners.

Simon told Inc. that since the litigation against the Strivers grant program, many corporations have moved away from having only two partners.

"I didn't plan on it," Simone said.

"I definitely prepared for it, but I didn't prepare for the mental and emotional impact it had on me and my team."

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Edward Blum, a conservative strategist for the American Alliance for Equal Rights [AAFER], sued Simon's Fearless Fund Management, LLC in August 2023. The lawsuit claimed that the firm's Fearless Strivers grant competition was "racially discriminatory" and violated civil rights. Act of 1866 to create criteria only for black women entrepreneurs.

According to Inc., the company started with a team of 19 people when it launched in 2019. However, due to litigation this was reduced to six.

Simone Inc. "It all fell apart because of the litigation," he said.

"You're talking about us losing millions of dollars and it's really impacting our operations," Simon said.

In June 2023, the Fearless Fund announced a multi-million dollar investment into its grant program from major corporations such as Bank of America, Costco, and Mastercard.

The companies invested in the Fearless initiative to help "women of color" businesses obtain venture capital funding, an effort that seeks to solve "the problems women of color face when obtaining funding for their businesses." helps to.

“Having received a multi-million dollar follow-on investment from Bank of America, Costco, and Mastercard, the Fearless Fund is doing essential work to provide advocacy, financial support, and resources for women of color in both its portfolio and emerging talent right now. More to come,” the fund said in a statement dated June 2023.

AAFER filed the lawsuit two months after receiving a multimillion-dollar investment from the fund, writing in a statement that AAFER members "are being excluded from participating in the program because they are of the wrong race."

"Under the terms of the grant program, official eligibility for the contest depends on the race of the applicant, with only women of color being eligible to participate in the process. Submitting an entry constitutes 'a contract' between the Fearless Fund and the applicant." is made,” AEER said in a statement.

On January 31, Simone petitioned a U.S. federal appeals court to lift an injunction against her Fearless Strivers Grant Contest, barring her from awarding $10,000 to $20,000 and additional development services to startups led by Black-women-owned businesses. was given.

Not only has the grant program struggled, but litigation has also hit the firm, resulting in the loss of eight figures in investments.

A federal appeals court held a hearing in Miami on January 31 to decide whether his request for an injunction on the grant program will be dropped.

Simon said at a press conference after the hearing that the venture firm has not been able to raise funds to continue its investment because of the litigation.

Simon said, "When people hear about lawsuits, sometimes a feeling of fear sets in. Yes, we have been affected financially because of this lawsuit. We are looking at almost eight figures in investment. were the ones that fell last fall." A press conference after the hearing in January.

Another venture capital firm reported needing to scale back operations and even lay off employees after a lawsuit targeting its grant program for black-owned small trucking companies.

Elizabeth Gore, co-founder of Hello Alice, an online platform for business owners, discusses the difficulties she faced due to America First Legal's litigation aimed at her grant program.

Gore said the company was forced to lay off 69 percent of its workforce.

Gore Inc. "Actually it still breaks my heart," she told the Daily Mail.

He added, "This happened in December, right before the holidays, and we had to lay off people who have been with us for years."