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Thanks to a lawsuit, Alexandria postponed a grant program for BIPOC founders

An Alexandria engineering firm is suing the city on the grounds that the program discriminates against white founders — the group receiving the largest amount of VC funding.

Old Town Alexandria. (Photo by Flickr user Joseph, used under a Creative Commons license)

An Alexandria, Virginia grant program for founders of color is getting delayed by a federal lawsuit.

The $500,000 BIPOC Small Business Grant Program, which was set to open applications Thursday, now faces a suit from Alexandria engineering firm Tridentis. The company claims that white founders are being left out of the program, which goes against federal laws (Tridentis is owned by a white founder). As a result of the legal conflict, the city is delaying opening applications for the grant initiative.

The suit was filed in U.S. District Court, and the city was served with the lawsuit on Monday. The city did not immediately respond to Technical.ly’s request for comment on the litigation.

“As we evaluate the lawsuit, the Program will be put on hold,” a city government statement said. “However, we want to reiterate the City is committed to serving all Alexandrians; we also remain focused on our responsibility to find equitable solutions that address the needs of our diverse small business community. We will provide more details about the status of the Program as we are able.”

The BIPOC Small Business Grant Program would offer $1,000-$7,000 grants to companies with at least 51% ownership by Black, Indigenous, Latinx or Asian founders. The funds were approved back in October, with plans to offer the grants on a first-come, first-serve basis.

In the complaint, the plaintiff alleges that excluding white founders from the funds goes against the Equal Protection Clause and unfairly leaves founders out. However, even after years of DE&I goals and proclamations from investors, BIPOC founders are the ones still being frozen out of investment. It can cost founders of color over $250,000 more to found a startup; moreover, the state-connected Virginia Innovation Partnership Corporation told Technical.ly last year that a little under half of its funds go to BIPOC founders (see the full breakdown here). In nearby Philadelphia, Pennsylvania, just two local founders nabbed 2% of all $187 million VC dollars that went to Black founders across the US in Q3 2022.

Melissa Bradley, founder of DC investment firm 1863 Ventures, told Technical.ly in June that what the firm calls “new majority entrepreneurs” often experience higher interest rates (anywhere from 3 to 13% more) based on perceived risk. Increased costs like these also mean that there are more solo founders of color, which can leave them ineligible for grants, accelerators and other programming.

“You cannot make these investment decisions or acceptance decisions by using the same criteria — not because they’re Black or Brown and they’re different, but it’s because their pathways were different,” Bradley said. “They’ve actually already invested a significant amount of capital that cannot be said for some other entrepreneurs, and that should be taken into consideration.”

Companies: 1863 Ventures
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