By Nate Raymond

A group founded by the conservative activist instrumental in the U.S. Supreme Court's June decision rejecting affirmative action in collegiate admissions on Wednesday sued an Atlanta-based venture capital fund that supports Black women who own small businesses, accusing it of unlawful racial discrimination.

The nonprofit American Alliance for Equal Rights, founded by affirmative action foe Edward Blum, said in its lawsuit that the firm, called Fearless Fund, is violating Section 1981 of the Civil Rights Act of 1866, a U.S. law barring racial bias in private contracts, by making only Black women eligible in a grant competition. It was filed in federal court in Atlanta.

Fearless Fund was launched in 2019 by three prominent Black women - actress Keshia Knight Pulliam, entrepreneur Arian Simone and corporate executive Ayana Parsons - and counts as investors Bank of America, Costco Wholesale, General Mills, Mastercard and JPMorgan Chase.

Lawsuits brought by another group founded by Blum led to the Supreme Court's June ruling declaring unlawful the race-conscious student admissions policies used by Harvard University and the University of North Carolina. The new lawsuit is Blum's first since that decision.

The conservative-majority court rejected policies used by many U.S. colleges and universities to use race as one of multiple factors in admissions in order to boost enrollment of Black, Hispanic and certain other minority students. Blum's group had argued that such programs discriminated against white and Asian American applicants.

The lawsuit centers on Fearless Fund's Fearless Strivers Grant Contest, which awards Black women who own small businesses $20,000 in grants, digital tools to help them grow their businesses and mentorship opportunities provided in conjunction with Mastercard.

Blum and the Texas-based American Alliance for Equal Rights have said some of the group's approximately 60 members - white and Asian American - have been excluded from the grant program due to their race.

Fearless Fund did not immediately respond to requests for comment.

In an interview, Blum said the lawsuit was the first of many he hopes to pursue through the American Alliance for Equal Rights to broadly challenge race-based policies used by private corporations.

The cases before the Supreme Court against Harvard and UNC were filed by the Blum-founded Students for Fair Admissions. Blum, who is white, said he plans to model the new group's cases after that successful litigation.

"The common theme of these organizations is to challenge in the courts the use of racial classifications and preferences in our nation's policies," Blum said.

(Reporting by Nate Raymond in Boston; Editing by Will Dunham)