Venture Fund Founder Sues PayPal, Alleging Discrimination

PayPal is being sued by Andav Capital founder Nisha Desai, who says she was excluded from the company’s diversity program because she is Asian. according to the suit filed this week.

In 2020, PayPal committed $530 million to support black and minority-owned businesses the awakening of Black Lives Matter. In the newly filed lawsuit, Desai says she applied for economic consideration but was rejected because she is Asian, as the program sought to focus on Black and Hispanic-owned businesses.

Desai founded Andav Capital in 2018, according to PitchBook, to invest in startup companies. The company has made at least 13 investments, including fintech startup Acorns, crowdfunding startup IFundWomen, and biotech company Kubik.

“Incomes that many people of other races, including Asian Americans, are not treated equally,” Desai said in the lawsuit, which was filed in New York state court. “Worse, PayPal and its senior management have been repeating the program’s focus on competition, boasting in statements and publications that PayPal’s program is for certain races and ethnicities and not for others.”

When reached by TechCrunch, PayPal spokesperson Taylor Watson declined to comment on the pending lawsuit.

In his statement, Desai says he met several times with PayPal executives and his company, PayPal Ventures, about his qualifications to receive funding, while Desai says PayPal’s head of legal and research told him in detail at a July 2020 meeting that the program favors companies. led by blacks and Hispanics “more than other races and ethnicities, including Asian Americans.”

When PayPal announced its first funding from a $530 million commitment, the company invested in businesses that have a black or Latino partner, “a brand that reflects PayPal’s mission,” it said.

“Even today, PayPal continues to make the same claims regarding competition,” the suit adds. “In all, PayPal has invested $100 million in 19 companies led by ‘black and Latinx managers’ but has not announced $1 in funding to funds led by Asian women – despite their interest and due diligence. … For PayPal and its executives, people Asian Americans may be a minority, but they are a minority. PayPal has not announced the end of the program.”

Desai claims that his refusal to refund PayPal cost his company “millions of dollars in critical costs.” The lawsuit also states that recipients of PayPal checks “were able to leverage those rewards to increase revenue, brand value, wealth, opportunity, and success.”

Meanwhile, funds like Desai’s that were rejected “were exposed to a false and misleading impression that PayPal made the decision based on their business, rather than competition for fund ownership,” the suit said.

Desai claims that PayPal violated the Civil Rights Act of 1981 and that PayPal’s “selective payment policy” is illegal under New York State and city laws that prohibit racial discrimination.

Desai is represented by Consovoy McCarthy, an accredited law firm and case histories related to race-based programs. The law firm sued Pfizer over its diversity program, which targets Black, Latino, and Native American people, alleging that. the program selected whites and Asian Americansthough later the suit was dismissed. Consovoy McCarthy also sued Harvard University and the University of North Carolina in 2022 for admissions based on the competition that followed. has contributed to the collapse of the definitive work in education.

Desai did not respond to TechCrunch’s request for comment on Friday. In a brief statement shared with TechCrunch, Consovoy McCarthy partner Patrick Strawbridge said: “PayPal singled out Ms. Desai because of her race. This discrimination is inconsistent with our policies and the stated spirit of the PayPal program. PayPal was a market leader and others followed, even as Mr. Desai pleaded with them to do him justice. We look forward to proving his case and doing justice to him in court.”

Desai joins other individuals and organizations who are suing various conspiracies targeting blacks and Hispanics. In particular, Edward Blum, the man who helped overthrow the legal system along with Consovoy McCarthy, founded the American Alliance for Equal Rights (AAER), which went to file a complaint with the Fearless Fund companysaying that one of his coins discriminated against whites and Asians because it was only given to black women.

The court case was dismissed, but many other cases have followed.

Sean O’Kane contributed reporting.

Edited with comments from Consovoy McCarthy.