Brainstorm Tech 2024: A Different Kind Of Equity In Venture Capital
Arian Simone, Founding Partner and CEO, Fearless Fund Interviewer: Allie Garfinkle, FORTUNE
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00:00Hello again.
00:01Hello.
00:02Long time no see.
00:03Yes.
00:04We were just standing together backstage, get it.
00:06Thank you so much for being here, Truly.
00:08Oh, thank you for having me.
00:10So we have a lot to get through.
00:11Let's jump right in.
00:12I would love to just start by setting the table here a little bit.
00:15Where are you at in this legal battle you're fighting?
00:18In this legal battle, the plaintiffs filed three things against our companies.
00:23They filed a temporary restraining order that got withdrawn.
00:26They filed a preliminary injunction against one of our grant programs.
00:30And they also filed the case itself.
00:33We went to court on the PI, the preliminary injunction.
00:36We won in the district.
00:37It was immediately appealed.
00:39We lost in the appeals process.
00:42And the case itself has yet to even be touched.
00:45So where are you, what happens next?
00:48This most recent loss in this ruling, where do you go from here?
00:51Because there's still a long fight to go.
00:53Yes and no.
00:55It depends on a variety of things.
00:58But what I can say is the options would be, of course,
01:01to appeal to the Supreme Court.
01:03Just to educate the audience some, the plaintiffs in our case,
01:06Edward Bloom, the founder of AAER, American Alliance for Equal Rights,
01:11he recently had a Supreme Court victory of stopping affirmative action
01:15at the colleges of June of 2023.
01:18And we were the next lawsuit he sued, basically, after his victory.
01:23And I don't desire, this is me speaking personally, not my legal staff,
01:27but I don't desire a SCOTUS ruling.
01:29I don't desire the implications of what that could be if it didn't go in our
01:33favor and how that could be so catalytic for other people.
01:37My desire is for us to be able to come to an agreement of settlement
01:41to be released from this.
01:43Now tell me a little bit about what it's been like investing throughout this.
01:46Because the Fearless Fund hasn't stopped working.
01:48So walk me through your success to date and what you've been up to.
01:53The Fearless Fund has made a lot of impact in the area of venture capital.
01:58Women of color are the most founded entrepreneurial demographic,
02:02just the least funded.
02:03We are the nation's first venture capital fund that is built by women
02:06of color for women of color.
02:08And we invest in women of color co-founded businesses.
02:11They receive about 0.39% of all the VC funding while making up over 20%
02:16of the U.S. population.
02:18So the work that we do is very important.
02:20These people are more than deserving.
02:22Our success is very simple.
02:24Prior to the Fearless Fund's existence, black women had an average
02:27fundraise of $30,000.
02:30And we came on the scene cutting seven-figure checks.
02:32We have invested in almost 50 companies.
02:35Our women are phenomenal.
02:38They are getting eight-figure revenue, year-over-year growth,
02:42aggressive growth.
02:43Their next levels of capital infusion will position them for exits.
02:47They are doing extremely well.
02:50They're on the cover of everybody's magazines.
02:51Everybody's list, magazine list.
02:53Give us some examples.
02:54Give us some examples while we're here.
02:55Examples?
02:56Yes.
02:56It's like picking a favorite kid.
02:57I know.
02:57I'm asking you to pick a favorite child on stage.
02:59How would you pick one child that you love a lot to tell us about?
03:02We love all of them.
03:03We love all of them.
03:05We love all of them.
03:05But I'll just give you a few.
03:06Partake Foods, Slutty Vegan, The Lip Bar, 13 Loon.
03:11Those are just a few.
03:13But they are all amazing.
03:15Fun fact, I actually have The Lip Bar in my makeup kit upstairs.
03:18You do?
03:18I do, actually.
03:21So tell me a little bit about how you're thinking about this next phase
03:25for the Fearless Fund.
03:27Next phase for the Fearless Fund, we will continue to do the work that
03:31we're doing.
03:32Global impact for us is a very big focus.
03:35What happens to black and brown people anywhere happens to black and brown
03:38people everywhere.
03:40So 20% of our portfolio is actually allocated to international investments
03:45or international impact.
03:47And we look forward to making this expansion very successful.
03:50And you do a lot of policy work as well, right?
03:53Tell us a little bit about that.
03:54Well, we don't do a lot of policy work.
03:56I think it knocks on our door kind of by accident.
03:59Prior to us even being sued, I wanted to be an advocate in the space of more
04:04access to capital for marginalized communities.
04:06So we have definitely taken on the initiative now that we've actually been
04:11a victim of this lawsuit to say, we need more policies in place to protect
04:16the right to fund marginalized communities.
04:19And the reality is, it's just good business.
04:22At the end of the day, we know that the U.S.
04:24economy is made up of over 54% small businesses and growing.
04:29When you cause disruption to access to capital, you're causing disruption
04:32to the U.S. economy as a whole.
04:34This is more of a macro issue than the micro issue that you see
04:37that we're going through.
04:39Now, tell me a little bit.
04:40We're about to come to the audience for questions.
04:42So get some ready, everybody.
04:43But tell me a little bit about your LPs, JPMorgan Chase, MasterCard.
04:47Tell me about how they've been a partner to you, especially through
04:50the last couple of years.
04:51Well, a lot of our LPs had already reinvested in FundTube prior to being sued.
04:57So we had a lot of re-ups.
04:59Post-litigation, we have had obstacles to overcoming fundraising.
05:03Because people were like, oh, gosh, they're under litigation.
05:06Do we fundraise?
05:07So we had closings falling apart left and right.
05:09And I was like, oh, no, this can't be happening.
05:12And as of recent, though, we have hired placement agencies.
05:16We're looking for capital even outside the country.
05:20Just diversifying the LP base, I would say.
05:22But companies such as that you've mentioned before, a lot of them
05:25have already invested in FundTube.
05:28And have they been talking to you through this?
05:30Like, what are those conversations like?
05:32Oh, everybody has definitely been talking.
05:34I would like to see probably more than talk from a lot of them.
05:38Not just the ones that you've mentioned.
05:40From a lot of them as a whole.
05:42Because everybody was very loud in June of 2020
05:45at the wake of George Floyd.
05:47We saw commitments in the area of diversity, equity, inclusion
05:51like we had never seen them before.
05:53And due to these lawsuits, we've experienced and witnessed
05:55this chilling effect of people not talking much at all.
05:59And it's still a priority.
06:00It's still needed.
06:01And at the end of the day, it's just good business
06:03and good for the economy.
06:05To that end, there is an indisputable societal level
06:07chill when it comes to talking about DEI.
06:09To what do you attribute that?
06:12These lawsuits.
06:13I think it's litigation.
06:15They have used litigation as a way to try to chip at diversity.
06:19And it doesn't have to be that way.
06:21I think if everybody were to stand strong in the statements
06:24that they've said in just recent years.
06:26I mean, 2020 was just four years ago.
06:29To stand strong in those statements
06:30and stand by the money they said they were deploying,
06:33I think that's what's needed.
06:35I don't even think it's a matter of saying women, people of color,
06:39diversity, equity, inclusion.
06:41This is just good business.
06:42And every report says that diverse teams
06:45outperform non-diverse teams on any given day.
06:48This is just good for the economy.
06:49Capitalism is just good across the board.
06:52All right, I'd like to open up the floor to questions.
06:55We have a paddle over there.
06:57Please stand up.
06:58Hi, say your name, company, and please keep it concise.
07:03Hi, Ari, I'm Emma Hinschliff with Fortune.
07:05It's nice to see you.
07:07Even in the past week, we've seen so much more
07:11of Silicon Valley and venture capital
07:13specifically coming out in support of Trump.
07:16What is it like for you to see your colleagues
07:18in this industry aligning themselves
07:21with the movement that brought this lawsuit forward
07:24against you?
07:27Well, we are clearly caught up in somebody's political agenda
07:31that I had no plans on being a part of at all.
07:37What I can say, when it comes to working in financial services,
07:41it's not that you lean towards either side.
07:44You're not leaning towards a Democratic side
07:46or a Republican side.
07:47You lean towards the side of your outcome.
07:49In financial services, we work with whoever is in office.
07:52We just do.
07:55Anybody that has a stance against diversity,
07:58I think that's more so where you're going with the comment.
08:01Yes, that is concerning.
08:02That is definitely concerning, because at the end of the day,
08:05it's just good business.
08:07You're choosing to not support diversity.
08:11It is alarming, because are you trying
08:14to signal that your desire of oppression and suppression
08:19is greater than a desire to make money, when this is capitalism
08:23and you're in it to make money?
08:24Well, and we actually talked about this a little bit
08:26backstage, but you were really surprised
08:29when you got the news about this lawsuit.
08:32Oh, of course.
08:33It was a beautiful, sunny day in Atlanta, Georgia.
08:36And I found out in the news that we were being sued.
08:39Wait, you found out on the news?
08:40Yes, I found out in the news.
08:43I thought it was chat GPT or something had taken place.
08:45Mind you, we are tech investors, just like many of you
08:48in the audience.
08:50And I said, somebody has something mixed up.
08:53And that's how I found out.
08:54And I realized that I told my staff, you know what?
08:57Federal lawsuits are public.
08:58Go find the filing, and they found the filing.
09:01So you, that, I had no idea.
09:04I hope you can see the genuine surprise.
09:06Any other questions for Arian?
09:10I can talk all day.
09:11I was gonna say, I can talk all day too.
09:13You know, one of the things that I've been wondering about
09:15is how you suspect some of these lawsuits,
09:18the societal level chill, will affect funding
09:20towards DEI initiatives.
09:22How do you sort of see those downstream effects
09:24playing out?
09:27You mean in reference to just the chilling effect overall?
09:29Yeah.
09:30It's concerning.
09:31One thing I can say is that when race-based consciousness
09:37is removed, then race actually,
09:41especially with black and brown people, get left behind.
09:44There has to be a level of awareness.
09:46There has to be a level of consciousness.
09:48There has to be a level of intentionality
09:50in order to produce the results.
09:52I tell people all the time, I actually desire the world
09:55that our plaintiffs desire.
09:57A world where race-conscious things don't matter.
10:00We're just not there yet.
10:02We have to have a focus and we have to have a level
10:03of intentionality to get to a place of an equitable society.
10:07Now once we get there, feel free.
10:11I have no problem with it at all.
10:13I would love to be able to not have these emphasis,
10:15which is why we're even petitioning
10:18the current administration, the current president
10:20and vice president to definitely step up
10:22in executive orders.
10:23They've done executive orders in diversity before.
10:25We're asking for one in the area to protect
10:28the right to fund marginalized communities.
10:31It's not personal.
10:32Whoever was in office, we'd be asking them to do this.
10:35How would you describe the state of diversity
10:37in venture capital?
10:39There is no diversity.
10:42I asked an open-ended, but I kind of knew
10:43where you were going.
10:44I hear the audience laughing.
10:45I work in an industry that is 92% white male
10:48on the investor side.
10:49I'm a strong believer that if we can diversify
10:51the investors, we can diversify the investments.
10:55Because you can take away racism and sexism
10:57and you still have what you call proximity.
10:59People are gonna do business with people
11:01who are in their networks and who they're surrounded by.
11:03It doesn't even have to be a level of biasness there.
11:06You're going to get deal flow from what's in your proximity.
11:09So yes, I don't know if there's too much diversity
11:14in the industry that I work in,
11:16but I am an advocate for it and I definitely encourage it.
11:19So one of the other things I would be really curious about
11:22is you said something to me while we were sitting in line
11:24for coffee outside.
11:27You said the most important thing to me is the law.
11:30What did you mean by that?
11:31The law, because right now I'm in a lawsuit
11:34and all people are doing, you go and you argue the law.
11:40And I even did a post recently.
11:42I'm like, there was a time when slavery was legal.
11:45Just because something is legal does not make it right.
11:48So we have to make sure that there are laws in place
11:51that are there to protect our right
11:53to fund marginalized communities.
11:56So having perfect policies, well, I won't say perfect,
11:59but having policies in place that support this type of work,
12:03support minority fund managers, support access to capital,
12:07it is very much so important.
12:09Right now, our industry of PEVC
12:11is a $62 trillion industry.
12:14And the bulk of that, a lot of the large investors
12:16come from pension funds.
12:18Well, pension funds are built off the backs
12:20of police officers and teachers and firefighters.
12:25And there are people of color
12:26in large numbers in these fields.
12:29And then it goes up, of course,
12:30into the venture capital world,
12:32where like I said, it's 92% white male.
12:35And then it goes up from there into the startups.
12:37And it very rarely makes a full circle
12:39back to a lot of the people of color
12:40whose backs this money was built off of.
12:44So yes, I do desire for policies to be put in place
12:47to make this a more equitable society.
12:50Distill it down a couple of sentences.
12:52What's one thing you want this audience to take away?
12:56One thing I want the audience to take away,
12:58that diversity makes good money.
13:00Just plain and simple.
13:02It's just good money.
13:03And good lipstick, in some cases.
13:05Oh, thank you.
13:06Thank you so much, Arian, for being here.
13:09Thank you for having me,
13:10and thank you for following the case.
13:11I'll continue to do so.
13:13Yeah.