Venture Capital Firms Caught in the Middle of DEI Legal Fights

The tug-of-war over diversity, equity, and inclusion is increasing the threat of legal scrutiny for venture capital firms, whether they proactively back more diverse business founders or maintain a status quo that tends to funnel most capital to White male entrepreneurs.

Investment firms face growing and competing pressures around diversity, much like law firms, corporations, and universities making promotion, hiring, and admissions decisions. A 2023 US Supreme Court decision striking down affirmative action in higher education quickly spawned litigation challenges to DEI programs across sectors.

For VCs and other business funding programs, the pressures are amplified by a June federal ...