Amazon Invests $150 Million In Underrepresented Founders

Reuters, Oct. 5 On Wednesday, Amazon.com Inc (AMZN.O) announced its first investment in external venture capital funds, allocating $150 million to organizations that provide funding to startups led by people from underrepresented groups.

By 2023, the online retailer plans to have invested in more than ten funds that will provide funding to around two hundred startups in the pre-seed stage of investing. According to Amazon, the initiative is targeting people of color, women, indigenous people, and members of the LGBTQIA+ community.

According to Nick Komorous, the company’s v.p. of corporate development, the venture is expected to generate a profit, spur the creation of new products that will be of use to the company’s clientele, and provide additional funding to people who would otherwise go without it.

More products developed through inclusive teams, he told Reuters, because “there’s a lot of data to support it.” The need is more pressing given that “investors are being more cautious about the economy in its current shape.”

This comes after PayPal Holdings Inc (PYPL.O) pledged $100 million to women-focused funds and banks earlier this year.

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As an employer, Amazon has struggled with diversity issues in the past, losing two of its highest-ranking Black leaders just lately. As for venture capital, it is still a minor player compared to rival Alphabet Inc (GOOGL.O), which has a division with about $8 billion in assets under management.

Amazon
Amazon

The store has invested directly in voice-technology businesses through its new $200 million Alexa Fund. However, Amazon was criticized for releasing products that directly competed with the businesses it had previously funded.

In response to criticism, Komorous explained that Amazon’s decision to become a limited partner was motivated by a desire to “force multiply” investments and gain access to startups at an earlier stage.

Amazon will provide founders with access to its executives and other resources without accepting a board seat, leaving the door open for potential future direct investment, he said.

According to its website, the company has placed four bets through its “Catalytic Capital” program, one of which was in the Techstars Rising Stars fund, which provides $100,000 to entrepreneurs without deep-pocketed networks in order to support young businesses. It was also revealed that Amazon had put money into venture capital firms like Collide Capital, Share Ventures, and the Elevate Future Fund.

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