- Just weeks after a U.S. appeals court blocked a Black-owned venture capitalist from funding women-of-color-led businesses, the ruling has had a chilling effect across the small industry of diversity-focused venture capital funds, according to founders, investors and lawyers who spoke to Reuters.
The backlash against diversity, equity and inclusion initiatives has expanded from Wall Street to Silicon Valley in the past year after the Supreme Court's decision in Students for Fair Admissions v. Harvard, which ended affirmative action in college admissions. Companies that championed diversity initiatives are now re-evaluating strategies to avoid legal entanglements.
Some founders are already feeling the impact. Sheena Allen, founder of digital bank startup Capway and a recipient of a Fearless Fund investment, took down her company’s website after funding dried up this year. The current climate has made it difficult for fintech startups to seek funding, especially for a Black female founder, she said.
After consulting her lawyer and limited partners, Shila Nieves Burney, a general partner at Zane Venture Fund, another Atlanta-based venture capital fund, decided to hold her ground and leave intact her fund’s website description of supporting diverse and inclusive founders.
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