Nisha Desai, the founder of Andav Capital, has filed a lawsuit against PayPal, accusing the company of racial discrimination. Desai alleges that she was excluded from PayPal’s diversity and equity program because of her Asian heritage. The lawsuit, filed in a New York federal court, raises questions about the legality of race-based preferences in corporate initiatives aimed at supporting minority-led businesses.
PayPal’s Diversity Commitment
In 2020, PayPal pledged $530 million to support Black and minority-led businesses in response to the Black Lives Matter movement. According to Desai’s lawsuit, the program deliberately prioritized Black and Hispanic-led enterprises, excluding other racial groups, including Asian Americans, from consideration.
Desai claims that this exclusion violated civil rights laws and cost her venture firm “vital capital worth millions of dollars.” The suit alleges that recipients of PayPal’s grants gained significant advantages, including enhanced brand equity, additional investments, and access to valuable resources, while her firm faced negative perceptions about its merits.
Desai’s Background and the Allegations
Desai founded Andav Capital in 2018 to invest in early-stage companies. Her firm has backed notable startups such as fintech platform Acorns, funding marketplace IFundWomen, and environmental tech firm Kubik. Despite her accomplishments, Desai alleges that PayPal’s investment program systematically excluded Asian-American-led funds.
In meetings with PayPal executives, Desai claims she was explicitly told that the program was designed to benefit Black and Hispanic-led firms, even at the expense of other minority groups. The lawsuit further points to PayPal’s public statements highlighting its race-based criteria for grant selection.
Legal Implications and Representation
The suit alleges that PayPal’s actions violate the Civil Rights Act of 1981 and New York state and city anti-discrimination laws. Desai is represented by Consovoy McCarthy, a law firm known for challenging race-based programs. The firm previously took on high-profile cases, including lawsuits against Harvard University and the University of North Carolina that contributed to the Supreme Court’s overturning of affirmative action in education.
Consovoy McCarthy partner Patrick Strawbridge stated, “PayPal discriminated against Ms. Desai based on her race. This discrimination is antithetical to our laws and to the very spirit of the alleged purpose of PayPal’s program. We look forward to proving her case and achieving justice in court.”
The Broader Context
This case adds to a growing list of legal challenges against diversity programs perceived as exclusionary. Recently, Edward Blum’s American Alliance for Equal Rights sued the Fearless Fund over a grant limited to Black women. The case was settled, but it highlighted the legal vulnerabilities of race-specific initiatives in both public and private sectors.
Desai’s lawsuit also underscores the broader debate about diversity and equity programs. Critics argue that such initiatives, if narrowly focused, risk alienating other minority groups. Proponents, however, view these programs as essential for addressing systemic inequities.
PayPal’s Response and Next Steps
PayPal has declined to comment on the lawsuit, citing pending litigation. The company’s diversity initiative remains active, but the legal challenges could influence how corporations structure similar programs in the future.
For consumers and businesses, this case may serve as a pivotal moment in shaping the conversation around diversity, equity, and inclusion. As the lawsuit unfolds, it could set significant legal precedents for corporate social responsibility programs and their alignment with anti-discrimination laws.
Asian-American Venture Fund Founder Sues PayPal Over Alleged Racial Discrimination in Investment Program
