Name: Brainstorm Tech 2024: A Different Kind Of Equity In Venture Capital
Uploaded: 2024-07-16
Duration: 13 min 19 s
Description: Arian Simone, Founding Partner and CEO, Fearless Fund Interviewer: Allie Garfinkle, FORTUNE

Arian Simone, Founding Partner and CEO, Fearless Fund Interviewer: Allie Garfinkle, FORTUNE

Brainstorm Tech 2024: A Different Kind Of Equity In Venture Capital

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Hello again. Hello, long time. No, see. Yeah, we were both standing together backstage. Get it. Thank you so much for being here. Truly. Oh, thank you for having me. So we have a lot to get through. Let's jump right in. I would love to just start by setting the table here a little bit. Where are you at? In this legal battle? You're fighting in this legal battle. The plaintiffs filed three things against our companies. They filed a temporary restraining order that got withdrawn. They filed a preliminary injunction against one of our grant programs and they also filed the case itself. We went to court on the P I the preliminary injunction we won in the district. It was immediately appealed. We lost in the appeals process and the case itself has yet to even be touched. So, where are you? What happens next? This most recent loss in this ruling? Where do you go from here? Because there's still a long, there's still a long fight to go. Yes and no. It depends on a variety of things. But what I can say is the options would be of course to appeal to the Supreme court just to educate the audience. Um, the plaintiffs in our case, Edward Bloom, the founder of a, a, er, American Alliance for equal Rights. He recently had a Supreme Court victory of stopping affirmative at the Colleges of June of 2023. And we were the next lawsuit he applied. He sued basically after his victory. And I don't desire, this is me speaking personally, not my legal staff, but I don't desire a Scot's ruling. I don't desire the implications of what that could be if it didn't go in our favor and how that could be so catalytic for other people. Um My desire is for us to be able to come to an agreement of settlement to be released from it. Now, tell me a little bit about what it's been like investing throughout this because the Fearless Fund hasn't stopped working. So walk me through your success to date and what you've been up to. Thank you. The Fearless Fund has made a lot of impact in the area of venture capital. Women of color are the most founded entrepreneur demographic. Just the least funded. We are the nation's first venture capital fund that is built by women of color, for women of color. And we invest in women of color co-founded businesses. They receive about 0.39% of all the VC funding while making up over 20% of the US population. So the work that we do is very important these people are more than deserving. Our success is very simple. Prior to the fearless fund's existence, black women had an average fund raise of $30,000 and we came on the scene cutting seven figure checks. We have invested in almost 50 companies. Our women are phenomenal. They are getting eight figure revenue year, over year growth, aggressive growth and their next levels of capital infusion will position them for exit. They are doing extremely well. They're on the cover of everybody's magazines, everybody's list magazine lists. Give us some examples. Give us some examples while we're here. Yes, I know. I'm asking you to pick a favorite child on stage. How would you pick one child? You love a lot to talk about. We love all of them. We love all of them. We love that. I'll just give you a few partake food, slutty vegan, the Lip bar 13 loon. Those are just a few, but they are all amazing. In fact, I actually have the lip bar in my makeup kit up. You do? I do actually. Um So tell me a little bit about how you're thinking about this next phase for the Fearless Fund. Next phase. For the Fearless Fund, we will continue to do the work that we're doing global impact for us is a very big focus. What happens to black and brown people, anywhere happens to black and brown people everywhere. So 20% of our portfolio is actually allocated to international investment or international impact. And we look forward to making this expansion very successful and you're, and you, you do a lot of policy work as well, right? Tell us a little bit about that, but we don't do a lot of policy work. I think that's in our door kind of by accident prior to us even being sued. I wanted to be an advocate in the space of more access to capital for marginalized communities. So we have definitely taken in on the initiative now that we've actually been a victim of this lawsuit to say we need more policies in place to protect the right to fund marginalized communities. And the reality is it's just good business. At the end of the day, we know that the US economy is made up of over 54% small businesses and growing when you cause disruption to access the capital, you're causing disruption to the US economy as a whole. This is more of a macro issue than the micro issue that you see that we're going through. Now tell me a little bit, we're about to come to the audience for questions. So get some ready everybody. But tell me a little bit about your LPS JP Morgan Chase mastercard. Tell me about how they've been a partner to you, especially through the last couple of years. Well, a lot of our LPS had already reinvested in fund two prior to being sued. So we had a lot of re ups um post litigation. We have had obstacles to overcoming fundraising because people are like, oh, gosh, they're under litigation. Do we fundraise? We had closings falling apart left and right. And I was like, oh, no, this can't be happening. And as of recent, so we have hired placement agencies. We're looking for capital even um outside the country, just diversifying the LP base, I would say. But companies such as that you've mentioned before, a lot of them had already invested in fund too. And have you and have they been talking to you through this? Like, what's what are those conversations like? Oh, everybody has definitely been talking. I would like to see probably more than talk from a lot of them. Not just the ones that you've mentioned from a lot of them as a whole because everybody was very loud in June of 2020. At the wake of George Floyd, we saw commitments in the area, diversity equity inclusion like we had never seen them before. And due to these losses we've experienced and witnessed this chilling effect of people not talking much at all and it's still a priority, it's still needed. And at the end of the day, it's just good business and good for the economy to that end. There is a indisputable societal level chill when it comes to talking about D I. So what do you attribute that these lawsuits? I think it's litigation they have used litigation as a way to try to chip at diversity and it doesn't, it doesn't have to be that way. I think if everybody were to stand strong in the statements that they've said in just recent years, I mean, 2020 was just four years ago to stand strong in those statements and stand by the money. They said they were deploying. I think that's what's needed. I don't even think it's a matter of saying women, people of color are diverse, equity inclusion. This is just good business and every report says that diverse teams outperform non diverse teams on any given day. This is just good for the economy. Capitalism is just good across the board. All right, I'd like to open up the floor to questions. We have a paddle over there. Please stand up. Hi, say your name company and please keep it concise. Hi, Ari, I'm Emma Hinchliff with Fortune. It's nice to see you. You know, even in the past week, we've seen so much more of Silicon Valley and venture capital specifically coming out in support of Trump. What is it like for you to see your colleagues in this industry aligning themselves with the movement that brought this lawsuit lawsuit forward against you? Oh, well, we are clearly caught up in somebody's political agenda that I had no plans on being a part of at all. Um What I can say when it comes to working in financial services. We, it's not that you lean towards either side, you're not leaning towards the democratic side or a Republican side, you lean towards the side of your outcome in financial services. We work with whoever is in office. We just, we just do um, anybody that has a stance against diversity, I think that's more so where you're going with the comment. Yes, that is concerning, that is definitely concerning. Um because if, and today it's just good business and if you ch you're choosing to not support diversity, it is alarming because are you trying to signal that your desire of oppression and suppression is, is greater than a desire to make money when this is capitalism and you're in it to make money? Well, and we actually talked about this a little bit backstage, but you were really surprised when you got the news about this, about this lawsuit. Oh, of course, it was a beautiful sunny day in Atlanta, Georgia and I found out in the news that we were being sweet. You found out on the news. Yes, I found out in the news. I thought it was chat GP T or something had taken place. Mind you, we are tech investors just like many of you in the audience. And I said somebody has something mixed up and that's how I found out. And I realized that I told my staff, you know, what federal lawsuits are public, go find the filing and they found the filing. So you that I had no idea I'm genuine. I hope you can see the genuine surprise. Any other questions for Arien, I can talk all day. I would say I can talk all day too. You know, one of the things that I've been wondering about is how you suspect some of these lawsuits, the societal level chill will affect funding towards ei initiatives. How do you sort of see those downstream effects playing out? Uh You mean in reference to just the chilling effect overall, it's concerning one thing I can say is that when race based consciousness is removed, then race actually, especially with black and brown people get left behind, there has to be a level of awareness, there has to be a level of consciousness, it has to be a level of intentionality in order to produce the results. I tell people all the time, I actually desire the world that our plaintiffs desire a world where race conscious things don't matter. We're just not there yet. We have to have a focus and we have to have a level of intentionality to get to a place of an equitable society. Now, once we get there, feel free. I I have no problem with it at all. I I would love to be able to not have these emphasis, which is why we're even petitioning the current administration, the current president and vice president to definitely step up in executive orders. They've done executive orders and diversity before we're asking for one in the area to protect the right to fund marginalized communities and it's not personal, whoever was in office, we'd be asking them to do this. How would you describe the state of diversity in venture capital? There is no diversity and I asked it open and I know how you laughing. I work in an industry that is 92% white male on the investor side. I'm a strong believer that if we can diversify the investors, we can diversify investment because you can take away racism and sexism and you still have what you call proximity. People are gonna do business with people who are in their networks and who were they're surrounded by. It doesn't even have to be a level of bias is there, you're going to get deal flow from what's in your proximity. So yes. Um I, I don't know if there's too much diversity in the industry that I work in, but I am an advocate for it and I definitely encourage it. So one of the other things I would be really curious about is you said something to me while we were sitting in line for coffee outside. Um You said the most important thing to me is the law. What did you mean by that? The law? Because right now I'm in a lawsuit and all people are doing, you go and you argue the law and I even did a post recently, I'm like there was a time when slavery was legal just because something is legal does not make it right. So we have to make sure that there are laws in place that are there to protect our right to fund marginalized communities. So having perf perfect policies, well, I won't say perfect but having policies in place that support this type of work, support, minority fund manager, support access to capital. It is very much so important right now, our industry of pe VC is a $62 trillion industry and the bulk of that, a lot of the large investors come from pension funds. Well, pension funds are built off the backs of police officers and teachers and firefighters and there are people of color in large numbers in these bills. And then it goes up of course, until the venture capital world where like I said is 92% white male and then it goes up from there into the start up and it very rarely makes a full circle back to a lot of the people of color which ba who backs this, this money was built off of. So, yes, I do desire for policies to be put in place to make this a more equitable society distill it down a couple of sentences. What's one thing you want this audience to take away one thing I want the audience to take away that diversity makes good money. This plain and simple. It's just good money and good lipstick in some cases. Thank you so much Arian for being here. Thank you for having me and thanks for following the case. Continue to do this. Yeah.