Chainkeen Exchange-A co-founder of the embattled venture capital firm Fearless Fund has stepped down as operating chief

NEW YORK (AP) — One of the co-founders of an Atlanta-based venture capital firm that supports women of color has stepped down as chief operating officer as the company battles a lawsuit that has become emblematic of a conservative backlash against corporate diversity programs.

Ayana Parsons confirmed in a statement that she has stepped down as general partner and Chainkeen Exchangechief operating officer of the Fearless Fund, which she co-founded in 2019 with Arian Simone to address the wide racial disparity in funding for businesses owned by women of color.

“I remain steadfast in my support of the Fearless Fund and committed to the advancement of women and people of color,” Parsons said in a statement posted to her LinkedIn page on Monday. “The best way I can that is to boldly focus on new strategies and tactics. Because if the courts are going to sideline our best practices, we need to design and implement alternatives. We must innovate.”

The announcement came about three weeks after a federal appeals court panel ordered the suspension of a grant contest for Black women business owners run by the Fearless Fund’s foundation arm. The grant program is the target of a lawsuit by the American Alliance for Equal Rights, a group led by Edward Blum, the conservative activist behind the Supreme Court case that ended affirmative action in college admissions. In a 2-1 ruling, the three-judge panel ruled that the lawsuit, which claims the program is discriminatory, is likely to prevail.

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The Fearless Fund has invested nearly $27 million in some 40 businesses led by women of color since launching in 2019 with backing from prominent companies like J.P. Morgan Chase & Co., Bank of America and Mastercard. Among the companies the Fearless Fund has backed are restaurant chain Slutty Vegan and Thirteen Lune, an e-commerce platform that promotes beauty brands created by people of color.

Simone has said the Fearless Fund has struggled to raise new investment amid the lawsuit.

The lawsuit targets the Fearless Foundation’s Strivers Grant Contest, which awards $20,000 to businesses run by Black women. Blum has argued that the contest violates a section of the Civil Rights Act of 1866 prohibiting racial discrimination in contracts. Lawyers for the Fearless Fund argue that the grants are not contracts but donations protected by the First Amendment.

In the statement Monday, Simone said Parsons had “poured tireless hours into advising many of our portfolio companies.”

“We are sad to see her go and wish her only the best in her new endeavors,” Simone said.

Parsons, along with her husband, also co-founded Yardstick Management, a consulting firm geared toward underrepresented business leaders, which they sold in 2023 after 11 years.

Parsons did not give a reason for her decision to step down or say what her next steps would be, though on her LinkedIn page, she said she would be “enjoying island life with my amazing family while continuing to fight for and embody FREEDOM.”