They were sued over grants for Black entrepreneurs. Now, these CEOs are raising millions to fund small businesses
It was meant to be a typical sweltering August day in Georgia for the Fearless Fund. Then CEO Arian Simone learned her venture capital firm was being sued for its efforts to support Black women entrepreneurs.
On Aug. 2, 2023, Edward Blum’s conservative American Alliance for Equal Rights alleged the VC firm’s grant program for Black-women-owned small businesses was discriminatory. That same year, financial tech firm Hello Alice was sued by America First Legal, an organization founded by former Trump administration adviser Stephen Miller. Similar to the Fearless Fund suit, America First Legal alleged a $25,000 grant program for Black-owned small businesses was discriminatory. The suits set off one of the most prominent affirmative action cases in recent years, and targeted funding aimed at bridging the gap between small entrepreneurs and access to capital.
The shock of the legal challenges brought Simone and Hello Alice cofounder and president Elizabeth Gore together, and now the two are friends and share a special bond forged in the fire of a twin crisis.
“We found each other, which was pretty special, through this,” said Gore, speaking to the audience at the Fortune Most Powerful Women Summit in Laguna Niguel, Calif., on Wednesday. Gore said the friendship she and Simone formed throughout the legal battle was almost like the basis for a rom-com, except it was real.
The two leaned on each other for support as they faced threats to not only their own safety, but that of their families, companies, and employees. Hello Alice, which provides services to more than 1.5 million small-business owners across the entire U.S., was in the midst of a Series C fundraise when it was hit by the lawsuit. The challenge effectively halted its work and resulted in the layoffs of two-thirds of the fintech’s employees, said Gore. The company was also subject to a barrage of repeat cyberattacks that Gore believes were related to the suit. Gore personally had a sheriff’s vehicle parked outside her family home for security reasons, she said, and suffered serious health problems during that time, including heart failure.
For Simone, the first three weeks after the suit were so dangerous that it wasn’t even safe to stay at her home in Georgia, she said.
Since then, both suits have been resolved. Simone announced a new $200 million fund, including a loan program available to any business owner meeting certain criteria, regardless of race or gender. The suit against Hello Alice was dismissed.
Now, the two are back at it and advancing the ball on bringing funding to small businesses, which Simone pointed out was difficult even before the legal hurdles.
“One thing I would like to point out is, prior to the lawsuits, the work that we do is difficult,” she said. “Right now, women of color receive only 0.39% of venture capital funds. There was opposition way before these lawsuits took place.”
Gore noted that these types of debates about funding and interpretation of laws previously used to happen among legislators in the U.S. Congress—not via lawsuits in the private sector that can halt job and value creation in the economy.
“It’s important that we get policymakers to start negotiating all of this,” said Gore. “This should not be in the private sector.”
The Broadsheet: Covers the trends and issues impacting women in and out of the workplace and the women transforming the future of business.
Sign up here.
