For the Fearless Fund, it was supposed to be a typical sweltering August day in Georgia. CEO Arianne Simone then learned that her venture capital firm was being sued for its efforts to support Black women entrepreneurs.
On August 2, 2023, the conservative American Equal Rights Alliance, led by Edward Blum, claimed that VC firms' subsidy programs for small businesses owned by Black women are discriminatory. That same year, financial tech company Hello Alice was sued by America First Legal, a group founded by former Trump administration adviser Stephen Miller. Similar to the Fearless Fund lawsuit, America First Legal argued that the $25,000 grant program for black-owned small businesses was discriminatory. The case sparked one of the most prominent affirmative action lawsuits in recent years, targeting funding aimed at bridging the gap between small entrepreneurs and access to capital.
The impact of the legal challenge brought Simone and Hello Alice co-founder and president Elizabeth Gore together, and the two are now friends, sharing a special bond forged during their twin crisis. I am doing it.
“We found each other through this, and it was something very special,” Gore told the audience Wednesday at the Fortune Most Powerful Women Summit in Laguna Niguel, California. . Gore said the friendship she and Simone developed through their legal battles was like the basis for a romantic comedy, except it was real.
In the face of threats not only to their own safety, but to the safety of their families, businesses, and employees, they turned to each other for support. Hello Alice, which serves more than 1.5 million small business owners across the United States, was in the midst of raising Series C funding when it was hit with a lawsuit. Gore said the challenge effectively shut down operations and resulted in the firing of two-thirds of the fintech company's employees. The company also came under a barrage of cyberattacks that Gore believes are related to the lawsuit. Gore personally parked his sheriff's car outside his parents' home for safety reasons, and during that time he suffered from serious health problems, including heart failure.
For Simone, the first three weeks after the lawsuit were so dangerous that she didn't even feel safe in her home in Georgia.
Both cases have since been resolved. Simone announced a new $200 million fund that includes a loan program available to business owners who meet certain criteria, regardless of race or gender. The lawsuit against Hello Alice was dismissed.
Now, the pair are back at it, working to provide funding to small businesses, which Simone noted was difficult even before the legal hurdles.
“One thing I would like to point out is that the work we do before litigation is difficult,” she said. “Currently, women of color receive only 0.39% of venture capital funding. There was a movement against it long before these lawsuits happened.”
Gore said this type of debate about funding and interpretation of laws has previously taken place among members of Congress, and not through private-sector lawsuits that could block jobs and value creation in the economy. He pointed out that there was not.
“It's important that we get policymakers to start negotiating all of this,” Gore said. “This shouldn't be in the private sector.”
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