[Booktrope]

Understandable in this context that comments would be very negative about looking at statistics relating to race, gender, national origin, etc. of how investors place money. After all, the start-up world is economics at its most meritocratic (is that a word? well it should be). And any constraints of this kind on how investors place their money is gonna have some downsides, many of which are discussed here, if at times in a somewhat overwrought way. Plus, yes, we've seen pretty nasty issues with affirmative action in other contexts, which we wouldn't want to replicate here.

But, alas! the cat is out of the bag as it were. Because there's more than one side to an issue like this. So, when leading VCs and investors determined, companies run by Black women weren't getting very much startup funding at all, they lined up to support The Fearless Fund, a significant, though not exactly huge, capital pool for early funding of ventures started by women of color, which they describe as "bridging the gap" by which they mean, the extremely small number of women of color who ever get funding. Yes, probably it's for what they conceive to be PR reasons, but whatever, I would have thought that the goal being equality of opportunity, and there being no law specifically covering it, that would leave it to the realm of politics and bloviating. But not so!

Encourged by the current antipathy of our Supreme Court for anything resembling affirmative action, a conservative legal group has sued, claiming that racial preference of this kind is prohibited. As a former lawyer I would have asked, just what law prohibits discrimination in investing? Because most lawyers up to recently thought, it wasn't covered. But the clever conservative lawyers point to 42 USC 1981, a Reconstruction alway that asserts, all people are entitled to the same right to contract as White people have. (How they talked back then)

Now, say, this lawsuit against The Fearless Fund succeeds. Well, hmm, that would mean every VC investment decision is subject to section 1981, and yes, it would give non-white people the right to sue if they had evidence of bias in the funding decision. In other words, if it actually succeeds, this lawsuit charging discrimination against The Fearless fund, a rather extreme effort to prohibit totally voluntary efforts by some big time investors to remediate a pretty obvious problem of a minority group's lack of access to capital, wow! suddenly,a pretty major new legal issue for VCs and other private capital enterprises to deal with, in every investment decision they make. And if ever there was a deep pocket for lawyers to pursue...I drop a veil over the scene.

So, just to add this to the discussion, this conservative attack on The Fearless Fund seems to me a far more dangerous to VCs than this California law. Because, yes, folks, there are issues with discrimination in how investment firms hand out capital. I've observed some nasty instances first hand. Please don't live in a dream world where you think it doesn't happen. (I personally think, due to the extreme polarization of most people's beliefs on this subject, it's rather less than most liberals think and rather more than most conservatives do.) Nevertheless from my perspective, another set of legal rights is pretty clearly not the best way to address it.

Because, if The Fearless Fund can be challenged as discriminatory, so can any other fund, that's how it works (well more or less, anyway - nobody who knows anything about it would accuse our legal system of being excessively consistent.) And that's a far greater threat to investors than a somewhat voluntary reporting requirement for VCs.