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The DEI backlash: Stay up to date on the latest legal and corporate challenges

TechBrunchBy TechBrunchJuly 29, 20245 Mins Read
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The Great Rollback is here. The phrase refers to big tech companies starting to cut back on some of the diversity, equity, and inclusion (DEI) programs that were put in place shortly after the killing of George Floyd. Most recently, Zoom announced it had fired its DEI team. Google and Meta have cut funding to DEI programs, and funding for Black founders continues to decline. Lawsuits have been filed targeting DEI programs, forcing companies to hide their efforts at inclusion, while billionaires debate whether DEI efforts at X are discriminatory.

With states continuing to ban affirmative action and a presidential election looming, this year is clearly a turning point for DEI. To stay up to date on the latest on the backlash against DEI in the tech industry, here are all the articles you need to read.

This list will be updated so please check back regularly.

Read about the AAER v. Fearless Fund case

In August 2023, the American Alliance for Equal Rights (AAER), founded by Edward Blum, who helped end affirmative action in education, filed a lawsuit against venture fund Fearless Fund for providing business grants to black women. AAER claimed that the grants discriminated against white and Asian American founders. The fund and AAER are fighting in court, and now Fearless Fund is barred from making grants to black women.

The fund's CEO, Ariane Simone, said on Instagram that the lawsuit has financially hurt the fund, causing it to lose millions of dollars in potential investments and facing staff cuts, cash shortages, expensive legal fees and threatening letters. But the impact of the lawsuit goes beyond one fund and could ripple through the entire ecosystem.

But Fearless Fund isn't the only organization being sued: the Small Business Administration, the Minority Business Development Agency, and even small businesses like Hello Alice have also been targeted and sued for trying to implement more diverse grant programs.

Contact Us Do you have any tips or stories to share about being a woman, person of color, or marginalized individual working in venture capital or a startup? You can contact Dominic-Madori Davis securely from a non-work device via Signal (+1 646 831 7565) or email. You can also contact TechCrunch via SecureDrop.

Read what critics are saying about DEI

Opposition to DEI has proliferated. Many of the biggest names in venture capital, including Elon Musk, Peter Thiel, and Y Combinator founder Paul Graham, have spoken out against DEI, while only a few, such as Mark Cuban, have spoken out in support of DEI. As long as billionaires continue to use their power and influence to speak out, this divide will continue and get worse.

At the same time, there are many who are working to change and become more inclusive, but change takes time and some promises remain unfulfilled.

See how the government is addressing DEI

California passed a bill last year that will soon require venture capital firms in the state to disclose the diversity profile of the founders they back, a move some have hailed as progress in a notoriously opaque industry.

But California isn't the only state trying to tackle diversity: Massachusetts is about to pass a bill that would extend its workplace laws to the venture industry, and New York City venture companies have formed an informal alliance to help promote diversity. Despite the promise of these efforts, there is also hesitation.

Rep. Emanuel Cleaver, co-chair of the Congressional Black Caucus, has been trying to pass legislation in Congress that would increase transparency in endowment investments, but he has stalled and said some education institutions across the country have been apparently “nasty” toward him and his efforts.

DEI has become an issue in Republican-leaning states, with many moving to ban affirmative action. Many tech hubs are actually just more liberal-leaning cities in Republican-leaning, or conservative-leaning, states. These include Tulsa, Atlanta, Miami, and Austin, all of which have been at the forefront of helping make tech more accessible to people outside the Bay Area. But will the states that govern these states undermine this progress?

Governor Ron DeSantis, for example, has been a pioneer in passing anti-DEI measures. He is one of the few governors to take aim at ESG investing, from book bans to restricting speech, and has proposed moves that could impact diverse fund managers in Florida.

At the national level, the CBC has begun looking into what's going on in the tech industry. Recently, the CBC sent a letter to OpenAI and the Ministry of Labour asking how the tech industry is trying to support black talent during this time.

OpenAI did indeed respond to CBC, and we now have the scoop on what happened next.

Read the latest DEI funding data

Funding for Black founders has been declining since 2020 and continued to do so last year.

Read DEI perspectives from abroad

The industry abroad is taking inspiration from the U.S., including how marginalized founders are treated. Stay up to date on how the global venture ecosystem is handling DEI and what it says about the progress of the U.S.

France is notoriously a challenging ecosystem for black founders. Learn how the country navigates one of the most opaque venture environments for people of color.

Meanwhile, the UK has made great strides in providing funding to black founders.





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