(NEW YORK) — Fearless Fund, a venture capitalist firm that invests in female entrepreneurs of color, is now the target of a lawsuit launched by a group founded by the man who led the fight to take down affirmative action in higher education.

“When we set out to start we had one clear vision in mind, and that was to change the game for women of color,” said Ayana Parsons, the co-partner of Fearless Fund, which was founded in 2019. “Our rationale was simple. These women are the most founded, yet the least funded. They’re starting businesses at a much higher rate than any other demographic. Yet they lack access to capital, access to resources, access to networks,” she continued.

Representatives of Fearless Fund partners Parsons and Arian Simone told reporters Thursday during a press conference in Manhattan that the fund was established to address the wide gap in venture capital funding for businesses led by women of color “who confront barrier after barrier to obtain support and investments for their businesses.”

“They want us to pretend that inequalities do not exist. They want us to deny our history,” said Alphonso David, co-counsel of the Global Black Economic Forum. “Their cynical legal theory is based on a law that was passed in 1866 after the Civil War. A law that was created to allow Black people to enter into contracts, when they had been denied that ability for decades.”

Research from the Proceedings of the National Academy of Sciences (PNAS) found evidence of racial bias in the investment decisions of asset allocators.

“Of the $69.1 trillion global financial assets under management across mutual funds, hedge funds, real estate, and private equity, less than 1.3% are managed by women and people of color,” the study read.

The fund is being sued by the American Alliance for Equal Rights, whose founder Edward Blum also led the Students for Fair Admissions, the group that initiated the anti-affirmative action case that reached the Supreme Court.

The conservative group aimed to take down affirmative action, which was implemented to address racial inequities in access to higher education, alleging it violated the equal protection clause of the Fourteenth Amendment.

The decision sided in part with Students for Fair Admissions, limiting how affirmative action can be used in higher education.

The recent lawsuit against Fearless Fund argues that the fund is “operating a racially discriminatory program that blatantly violates Section 1981’s guarantee of race neutrality.”

The Fearless Strivers Grant Contest hosted by the fund awards $20,000 grants to winning applicants. According to the lawsuit, the program states it is “open only to Black females.”

Section 1981 prohibits race discrimination in the making and enforcing of contracts. American Alliance for Equal Rights argues “the submission of an entry forms ‘a contract’ between Fearless Fund and the applicant,” according to the complaint.

ABC News has reached out to the American Alliance for Equal Rights for comment on the litigation.

Blum told TechCrunch+ that his group was contacted by a woman-owned business that sought to challenge the fund.

“The program being challenged is racially exclusive, thus violating our nation’s civil rights laws,” Blum told the news organization. “It is to be hoped that other programs like this one end these practices and offer the benefits to all small businesses regardless of the owner’s race.”

Fearless Fund partners are defending their work, pointing to the poor representation of women of color among venture capital recipients and the underlying bias that causes such inequity.

“Our vision is to promote a global society where marginalized and underrepresented communities are empowered with unbiased access to the resources and assistance that are critical to achieve business success,” the fund said in a statement to ABC News.

According to research and news organization Crunchbase, women received only 2.3% of venture capital funding in 2020. That number shrinks when it comes to women of color.

In 2021, Black women received less than .35% of the total venture capital spent in the U.S., according to a Crunchbase analysis.

The fund said it has worked with major corporate partners across many sectors.

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