Lynching DEI: Next target, entrepreneurship

This week, a U.S. court decision struck a huge blow to U.S. equity based entrepreneurship and innovation programs. 

The AAER (American Alliance for Equal Rights), an alleged dark money funded, conservative anti-affirmative action activist organization, successfully sued The Fearless Fund, a five-yea- old Black women led Atlanta-based fund that awards up to $20,000 in grants, business support services and mentorship only to Black women owned businesses. The court ruled that their program is discriminatory against white and Asian women. The Fearless Fund is now banned from awarding any more grants exclusively to Black Women.  

To date there are over 44 Black women in their investment portfolio. The fund’s supporters include Bank of America, Invest Atlanta and surprisingly, Paypal.

Black women founders in the US generate on average $24,000 in revenue each, six times less than women entrepreneurs overall. Approximately 0.39 per cent of venture capital (VC) funding goes to Black women entrepreneurs. The figures are similar in Canada. A recent WEKH study found Canadian Black women founders experience similar barriers due to anti-Black racism and sexism in entrepreneurship support spaces.  

Despite some state level efforts to curtail, it’s clear that Diversity Equity Inclusion (DEI) backlash supporters in the U.S. are emerging like a noisy brood of cicadas, underground for years, only to pop up all at once. American universities, tech mega corps and other organizations are slashing DEI departments and funding for initiatives. Silicon valley spawned tech billionaires and politicians are amplifying the call for DEI to die.  

But this is the first time an entrepreneurship support organization was targeted. 

It won’t be the last. In February 2024, The AAER filed another suit against a Texas based nonprofit entrepreneur support grant program for women and minorities (Hidden Star) on grounds of discrimination on behalf of a white male entrepreneur. The program offers a max of $2,750 USD to eligible minority entrepreneurs. AAER alleges the program amounts to illegal discrimination under Section 1981 of the Civil Rights Act of 1866, a Civil War-era anti-discrimination statute.

Should the diverse Canadian entrepreneurs worry that the same thing could happen here?

Kofi Achampong, a lawyer & government relations advisor that focuses on equity and business law related issues at Achampong Law, says “although it’s not improbable that someone could challenge an equity-based program seeking to address historical disadvantage in business-funding or investment here in Canada, a program of this sort would likely be protected by provisions under Section 15(1) and (2) of the Charter of Rights and Freedoms as well as exceptions under various provincial human rights codes.

However, while legal challenges to DEI based entrepreneurship supports in Canada may be less likely, anti DEI rhetoric can still impact policy and funding. 

Reactions from Black and diverse women’s entrepreneur support organizations in Canada indicates that there has already been DEI rollback here. But unlike America’s caterwauling cicada clangor, it’s a little harder to detect.

Janice Bartley, founder of Foodpreneur Lab, which administers a Black entrepreneur in food program says “I am not surprised but it does worry me. Throughout the course of history, the judicial system has been utilized to assert dominance over the Black community. As Canadians, we view what’s happening in the U.S. with distant disappointment. However, we must acknowledge that similar narratives are already here too. Our approach to undermining progress is just more subtle than theirs. Unless one scrutinizes enough, it could easily go unnoticed.”

In 2020, Pitch Better founder Amoye Henry had the opportunity to collaborate with Ariane Simone, founder of the Fearless Fund, on a pitch event called InvestHer. Henry believes that equity based programs are not just about kicking discrimination to the curb. 

“With facts and empirical evidence on our side, we can advocate for policies and legislation that safeguard DEI programs as tools for economic growth,” said Henry.

Nancy Wilson, CEO of the Canadian Women’s Chamber of Commerce expressed broader concern:  “What’s next? Women’s programs? Indigenous? LGBTQ+? Will it, can it happen in Canada? Yes. One-hundred per cent. It’s happening in my living room and at the pub across the street. The conversations that I have with men are changing (I’m talking about men who are friends and speak freely with me). There is a widespread backlash simmering. It’s manifesting here in the anti-Trudeau rhetoric which quickly segues into anti-DEI, racist, sexist commentary.”

Vicki Saunders, founder of Coralus, a $19 million fund and 7,000 member community dedicated to supporting diverse women entrepreneurs in Canada, the U.S. and abroad, adds: “The court decision to shut down the Fearless Fund’s granting to black women entrepreneurs saying it ‘inflicts irreparable injury’ is simply the most absurd abuse of power and racist action.”

According to a Canadian 2021 survey from Abacus Data, only two per cent of Canadian VC funding went to Black-led businesses, and 76 per cent of respondents to the survey noted that their race made it harder for them to succeed as a founder. What’s more, according to a 2021 survey commissioned by the African Canadian Senate Group, only 19 per cent of those surveyed said they trust banks to do what is best for their community. The same survey found that three-quarters of respondents would deem it difficult to find $10,000 if they needed to support their business.

What can we do about it? 

“We need to create new systems that allow all humans to flourish. Operating within our existing systems guarantees that we will be continuously held back and discriminated against because the rules are set up to keep us out,” said Saunders.

Henry emphasizes the importance of research to provide indisputable data on challenges faced by diverse entrepreneurs and the economic imperative of inclusion. In 2021, 1.5 million people in Canda (4.3 per cent of the population) reported being Black. 

Achampong adds we can’t be naive. 

“What is very clear, and should be clear to all of us, is that all courts-including Canadian courts- are very much affected by the social whims of the days — in this case a general backlash to many Black-focused and DEI-driven ameliorative initiatives to redress historical injustice. Of course, the U.S court decision isn’t fully dispositive of the matter and I fully expect the matter to go to the Supreme Court. But given the string of conservative decisions of late, I don’t have much faith in process that either,” Achampong said. Canada currently has more than 12 programs and funds for Black Entrepreneurs.