Nisha Desai, the Indian American founder of venture capital firm Andav Capital, has filed a lawsuit against PayPal, accusing the payment giant of racial discrimination. Desai claims she was excluded from PayPal’s $530 million diversity and equity program because of her Asian heritage.
In the wake of the Black Lives Matter movement in 2020, PayPal pledged $530 million to support Black and minority-led businesses. Desai alleges in the lawsuit, filed on January 2 in New York federal court, that her application to the program was ignored because she is Asian. According to TechCrunch, PayPal’s program primarily targeted Black and Hispanic-led enterprises, excluding Asian Americans.
Desai, who was born and raised in the Deep South, felt she was “a good fit for PayPal’s investment program.” She claims to have spent 1.5 months seeking funding from PayPal before communication ceased. During that time, PayPal invested $100 million in 19 venture capital firms led by Black and Hispanic individuals.
“Funds majority-owned by individuals of other races, including Asian Americans, are not given equal consideration,” Desai stated in her suit. “Worse, PayPal and its senior management have repeatedly trumpeted the program’s focus on race, bragging in statements and press releases that PayPal’s program is for some races and ethnicities and not others.”
Desai alleges that PayPal executives explicitly told her during a July 2020 meeting that the program prioritized Black and Hispanic-led firms over others, including Asian Americans. Her suit further claims that other Asian American businesswomen were similarly told they were ineligible for funding.
“To PayPal and its executives, Asian Americans might be minorities, but they’re the wrong kind of minority,” the lawsuit reads.
Desai founded Andav Capital in 2018 to invest in early-stage companies and has backed startups such as Acorns, IFundWomen, and Kubik. She argues that being excluded from PayPal’s program cost her firm “vital capital worth millions of dollars.” She also claims that those who received PayPal funding gained additional investments, brand equity, and resources, while her rejection created a perception that her firm was unqualified.
“When PayPal announced its first investments from the $530 million commitment, the company invested in firms with at least one Black or Latino general partner, an unmistakable racial pattern that reflected PayPal’s stated race-based purpose,” the lawsuit alleges.
Desai’s legal team, Consovoy McCarthy, known for challenging race-based programs, 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.”
PayPal declined to comment, citing the ongoing litigation. Desai alleges that PayPal’s actions violated the Civil Rights Act of 1981 and state and city laws prohibiting racial discrimination.
As Desai seeks justice in court, the lawsuit raises questions about the legality of race-based diversity initiatives in the corporate world.
