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

The Great Rollback is here. The phrase refers to Big Tech starting to slash some of the diversity, equity and inclusion (DEI) programs that were implemented shortly after the murder of George Floyd. Most recently, Zoom announced that it laid off its DEI team. Google and Meta have started to defund their DEI programs, and funding to Black founders continues to dip. Lawsuits have been filed targeting DEI programs, forcing companies to now hide their inclusion efforts while billionaires are arguing on X about whether DEI initiatives are discriminatory or not.

It’s clear that this year will be a turning point for DEI, especially as states continue to ban affirmative action measures and with a presidential election just around the corner. Here are all the stories you need to read to stay updated on the developments regarding tech’s ongoing DEI backlash.

This list will be updated, so keep checking back.

Read about the AAER vs. Fearless Fund lawsuit

In August 2023, the American Alliance for Equal Rights (AAER), founded by Edward Blum, the man who helped overturn affirmative action in education, filed a lawsuit against the venture fund Fearless Fund for offering business grants to Black women. The AAER alleged that the grant discriminates against white and Asian American founders. The Fund and AAER are battling the case in court, and currently, Fearless Fund is barred from awarding grants to any more Black women.

On Instagram, Arian Simone, the CEO of the Fund, said that the lawsuit has financially hurt the fund, as it lost millions in potential commitments and faced staff cuts, low cash run, expensive legal bills and threatening letters. The impact of the lawsuit, however, could go much deeper than just affecting one fund and could have ripple effects throughout the ecosystem.

But Fearless Fund isn’t the only one being sued. The Small Business Administration, Minority Business Development Agency and even smaller companies like Hello Alice are being targeted and sued for trying to implement diverse grant schemes.

• Here’s what the Fearless Fund lawsuit could mean for venture
• Fearless Fund responds to racial discrimination lawsuit
• Fearless Fund barred from awarding grant to Black women founders
• An appeals court rules that VC Fearless Fund cannot issue grants to Black women, but the fight continues
• Fearless Fund grant program was already ‘at risk’ before lawsuit
• The civil rights movement comes to venture capital
• Investors suggest funds prepare for the fallout of the Fearless Fund lawsuit, not worry about it
• Fearless Fund’s founder has resigned, and it’s a sad reflection on the VC world for Black women

Read what critics are saying about DEI

Anti-DEI rhetoric has dramatically increased. A lot of big names in venture, like Elon Musk, Peter Thiel and Y Combinator founder Paul Graham, have shared sentiments against DEI, while only a few, like Mark Cuban, have expressed support for it. This division is bound to last and only get deeper as billionaires continue wielding their power — and influence — to make their opinions heard.

At the same time, there are many who are indeed trying to change and become more inclusive. Change takes time, though, and some of the promises made haven’t been fulfilled.

• Tech’s DEI backlash is here
• 3 years after BLM, here’s who stuck to their diversity commitments
• Silicon Valley leaders are once again declaring ‘DEI’ bad and ‘meritocracy’ good — but they’re wrong

Read how governments are handling DEI

California passed a bill last year that will soon require venture capital firms in the state to reveal the diversity breakdown of the founders they back. Some herald the bill as progress in a notoriously opaque industry.

However, California is not the only state looking to address diversity. Massachusetts is looking to pass a bill that would extend workplace laws to the venture industry; New York City venture firms informally got together to create an alliance to back more diversity. There is excitement surrounding these initiatives, but also some hesitation.

Rep. Emanuel Cleaver, who is co-chair of the Congressional Black Caucus, has been trying to pass a bill in Congress that would make endowment investing more transparent. He’s hit a snag and said that a few educational institutions in the nation have been outright “nasty” toward him and his efforts.

DEI has become a hotbed issue in red states, as many have taken to banning affirmative action measures. Many tech hubs are actually just blue cities, meaning more liberal-leaning cities, within red, or more conservative-leaning, states. These include Tulsa, Atlanta, Miami and Austin, and all are at the forefront of helping to make tech more accessible to people outside of the Bay Area. But will their governing states put a dagger in all that progress?

Gov. Ron DeSantis, for example, is a leader in passing anti-DEI measures. From book banning to speech restrictions, he is also one of a few governors taking aim at ESG investing, proposing a move that could affect diverse fund managers in the state of Florida.

On a national level, the Congressional Black Caucus (CBC) has taken to finding out more about what is happening in tech. It recently wrote letters to OpenAI and the Department of Labor to see how the tech industry is looking to support Black talent during this time.

OpenAI actually did respond to the CBC, and we got the scoop on what happened next.

• New California law would force firms to report diversity metrics
• Investors are split on whether California’s diversity bill will make an impact
• Proposed legislation would force US higher education endowments to reveal where they invest
• Tulsa’s tech scene remains resilient amid state’s anti-DEI efforts
• Ron DeSantis’ proposed ban on ESG investments would be another blow for diverse fund managers
• Black representatives in Congress voice concerns over impact of tech layoffs on minority workers
• OpenAI responds to Congressional Black Caucus about lack of diversity on its board

Read the latest DEI funding data

Funding to Black founders has continued to dip since 2020, and last year was no different.

• Funding to Black founders was down in 2023 for the third year in a row

Read the DEI view from abroad

Industries abroad look to the States, including when it comes to how marginalized founders are treated. Stay up-to-date on how global venture ecosystems are handling DEI and what it says about progress in the U.S.

France is a notoriously tricky ecosystem for Black Founders. Learn how the country is navigating one of the most opaque venture landscapes for people of color.

The U.K., meanwhile, has made a lot of progress regarding funding for Black founders.

• The US could learn a lot from how the UK is crafting DEI policy for venture capital
• What’s it like being a Black founder in France?
• There’s a growing desire in the UK for more Black specialty venture funds