PayPal is being sued by Nisha Desai, founder of venture firm Andav Capital, who says she was excluded from the payments giant's diversity and equity program because she is Asian, according to a lawsuit filed this week. claims.
In 2020, PayPal committed $530 million to support more Black and minority-led businesses in response to Black Lives Matter. In the new lawsuit, Desai claims that her application for funding consideration was ignored because she is Asian because the program sought to focus only on Black and Hispanic businesses. It is claimed that
According to PitchBook, Desai launched Andav Capital in 2018 to invest in early-stage companies. The venture firm has at least 13 investments, including fintech startup Acorns, startup funding marketplace IFundWomen, and environmental technology company Kubik.
“Funds that are majority owned by individuals of other races, including Asian Americans, are not given equal consideration,” Desai said in a lawsuit filed in New York federal court. “Worse still, PayPal and its senior management have repeatedly touted the racial focus of its programs, stating that PayPal's programs are for some races and ethnicities and not for others.” They boast in statements and press releases that they are not for the public.
When contacted by TechCrunch, PayPal spokesperson Taylor Watson declined to comment on the matter, citing pending litigation.
Desai alleges in his lawsuit that he met with executives from PayPal and its venture arm PayPal Ventures multiple times to discuss eligibility for financial grants, and Desai claims that PayPal's head of public policy and research He claims that he made this clear to her at a meeting in July 2017. The program says it prioritizes Black- and Hispanic-led businesses “over other races and ethnicities, including Asian Americans.”
When PayPal announced its first investment of $530 million in commitments, the company invested in companies with at least one Black or Latinx general partner, which was “based on PayPal's stated race.'' “an unmistakable racial pattern that reflects a purpose,” the complaint states.
“Today, PayPal continues to make similar race-based claims,” the complaint adds. “PayPal has invested a total of $100 million in 19 venture capital firms led by 'Black and Latinx executives,' but funds led by Asian American women have shown no interest and aptitude. …To PayPal and its executives, Asian Americans may be a minority, but they are the wrong kind of minority. I haven’t.”
Desai claims that his company lost “millions of dollars worth of critical capital” after PayPal rejected its investment commitments. The lawsuit also alleges that those who received the PayPal checks “could leverage their awards for further investments, brand equity, resources, access, and success.”
Meanwhile, rejected funds like Desai's “suffered an adverse and inaccurate perception that PayPal made decisions based on the merits of the business, not the race of the fund's owners,” the lawsuit says. claims.
Desai alleges that PayPal violates the Civil Rights Act of 1981 and that PayPal's “racially exclusive investment program” is illegal under New York state and city laws prohibiting racial discrimination.
Desai is represented by Consovoy McCarthy, a conservative law firm with a history of taking on cases related to race-based programs. The law firm specifically sued Pfizer for its diversity program, which targeted blacks, Latinos, and Native Americans, alleging that the program discriminated against white and Asian American applicants. was rejected. Consovoy McCarthy also sued Harvard University and the University of North Carolina in 2022 over race-based admissions, which later helped overturn affirmative action in education.
Desai did not respond to TechCrunch's request for comment on Friday. In a brief statement shared with TechCrunch, Consovoy McCarthy partner Patrick Strawbridge said: “PayPal discriminated against Mr. Desai on the basis of his race. This discrimination is contrary to our laws and the very spirit of the purported purpose of PayPal's programs. PayPal is a market leader and a fair Despite Ms. Desai's pleas for legal action, other companies have followed suit. We look forward to proving her case and achieving justice in court.”
Desai joins other individuals and organizations suing the diversity plan for targeting only black and Hispanic communities. Most notably, Edward Blum, who along with Consovoy McCarthy helped overturn affirmative action in education, founded the American Alliance for Equal Rights (AAER), one of whose grants discriminated against whites and whites. He sued the venture company Fearless Fund, accusing him of Asian American because it was only awarded to black women.
That lawsuit was settled, but more lawsuits followed.
Sean O'Kane contributed reporting.
Updated with comment from Consovoy McCarthy.