The Fearless Fund, a venture capital firm that invests in supporting women of color entrepreneurs, has agreed to shut down its grant program for Black women as part of a settlement with the conservative group American Alliance for Equal Rights. On Wednesday, both sides reached a settlement, agreeing to dismiss the case and end the program. This comes after a federal appeals court ruling in June ordered the program to be suspended.

The program, called the Strivers Grant Contest, awarded $20,000 to Black women-owned businesses, but the lawsuit claimed it was discriminatory. The conservative group claimed the program was in violation of the Civil Rights Act because it was only open to Black women.

According to the Fearless Fund, less than half a percent of venture capital funding goes to businesses led by women of color. 

Arian Simone, the founding partner and CEO of the Fearless Fund, considers the settlement a win, as the program was already at its conclusion and only one grant was left to award.

“If we have to forego that one grant to stay in business to deploy millions, that is definitely a win,” she said.

Simone said that the Fearless Fund remained fully operational throughout the litigation and had been deploying grants. She said that just two weeks ago, the firm awarded grants at a major event called Fearless Moguls.

Though the Strivers Grant Contest focused on Black women, Simone clarified that the Fearless Fund supports all women of color, including Hispanic and Asian entrepreneurs.

What’s next for the Fearless Fund?

Simone said that the organization has accepted the settlement and has no plans to take the case to the Supreme Court since the risk was too high, and that the “consequence of that is too big.”

The American Alliance for Equal Rights responded with a statement from its president, Ed Blum, who reiterated his view that “race-exclusive programs like the one the Fearless Fund promoted are divisive and illegal.” Blum argued that opening such programs to all participants aligns with the nation’s civil rights laws.

But Simone said the issue is a crucial one for minority business owners.

“The disparities are evident. Women of color and Black women in particular receive less funding that any other entrepreneurial demographic while starting more businesses than everybody else,” she said. “It’s unfortunate that anybody would view this as something wrong or illegal.”

Despite the legal challenges, the Fearless Fund continues to expand its support for under-resourced entrepreneurs. 

Simone announced a new $200 million fund, which includes a loan program available to any business owner who meets certain criteria, regardless of race or gender. Previously, the fund provided venture capital, which involves offering cash in exchange for ownership, and had a grant program through its foundation. 

Now, entrepreneurs who have been in business for at least a year and has a credit score of 600 or higher can apply for the loan program. This initiative is available to both men and women, as it was designed to support all under-resourced business owners.

Meanwhile, Simone said more needs to be done to close the gap.

“We need the lawmakers and legislators to put laws in place that protect the right to fund marginalized communities so everyone can achieve the American dream,” she said.