Amazon to Invest $150 Million in Funds That Provide Underrepresented Entrepreneurs with Access to Capital
The new Amazon Catalytic Capital project will finance companies as well as provide mentorship and business opportunities to founders that are Black, Latino, Indigenous, women, and LGBTQIA+.
Collide Capital, Elevate Future Fund, Share Ventures, and TechStars Rising Stars are a few of the initial fund investments.
October 5, 2022, SEATTLE — (BUSINESS WIRE) — Amazon (NASDAQ: AMZN) today unveiled Amazon Catalytic Capital, a brand-new program that will invest $150 million in venture capital (VC) funds, accelerators, incubators, and venture studios that support business owners from underrepresented backgrounds, primarily at the pre-seed/seed stage of venture capital funding. The business will put money into funds that support female, Black, Latino, Indigenous, and LGBTQIA+ founders. Over the course of the upcoming year, Amazon anticipates supporting over 200 businesses and over 10 funds.
“We’ve seen incredibly innovative ideas from underrepresented entrepreneurs—from companies offering inclusive health services for women, to startups helping companies mitigate climate impact for underserved communities—and we’re convinced that an inclusive investment strategy leads to better returns and innovation. We want to ensure that these companies and their founders have the same access to capital as anyone else,” said Peter Krawiec, Amazon’s senior vice president of worldwide corporate development. “We hope that our investment will be catalytic—sparking a force-multiplying effect by inspiring others to invest in these companies, fostering inclusion and innovation, positively impacting communities, and creating generational wealth and financial return.”
In addition to funding, the businesses in the funds’ portfolios will have access to tools to support their technical and business strategies as well as mentoring from Amazon executives. Teams from Amazon will also work with the startups to find potential joint ventures and product collaborations that might speed up their development.
In the past, underrepresented founders have faced higher challenges in obtaining funds to realize their ideas and fewer access to startup venture capital. Studies repeatedly demonstrate the underrepresentation of Black, Latino, female, and LGBTQIA+ business founders in the total number of funded startups. Women founders got 2% of venture capital funding in the United States in 2021, according to PitchBook. Similar to this, according to Crunchbase News, only 1% and 2% of U.S. venture capital funding went to firms led by Black and Latino founders, respectively. According to research, these discrepancies have a negative knock-on impact that prevents disadvantaged entrepreneurs from accessing networks, mentors, and sponsors. Despite these obstacles, diverse and inclusive teams are 70% more likely to service new categories and have a 75% higher chance of seeing ideas become products.
What is Amazon Catalytic Capital?
The goal of Amazon Catalytic Capital is to help more entrepreneurs with minority founders access funding, mentorship, and cooperation opportunities in order to help them realize their ideas.
By investing in those who regularly fund and assist these startups, they think they can have a greater effect, earn more revenue, and advance more quickly.
What Amazon Catalytic Capital Do?
They invest in funds with both capital and additional resources for the underlying portfolio company in order to create change that is both scalable and sustainable:
Capital: Investing in venture capital to realize new ideas
Executive Mentorship: 1:1 mentoring from Amazon executives to speed up success
Access: Opportunities for technical assistance, partnerships, and resource expansion
Amazon Catalytic Capital Project
Amazon has made the following investments through this project:
Aaron Samuels, a co-founder of AfroTech, and Brian Hollins, a founding board member of BLCK VC, are the two founders under the age of 35 of Collide Capital, a Black-owned seed and pre-seed venture capital firm. Over 40 businesses have received funding from Collide Capital to date, and more than 80% of them have founders that are Black, Latino, or female.
Elevate Future Fund
Energy Impact Partners (EIP) is in charge of Elevate Future Fund, which focuses on providing funding to underrepresented founders developing strategies to hasten the transition to a more sustainable and clean energy future. Additionally, it will invest in businesses run by underrepresented entrepreneurs, empowering diverse talent, and/or providing struggling or underprivileged areas with economic opportunities. Elevate will work closely with Amazon’s Climate Pledge Fund, which finances start-ups in the field of climate technologies.
Share Ventures is a venture fund and venture foundry established in Los Angeles that specializes in human performance. Share is a problem-solving company that invests in and builds cutting-edge businesses that help people reach their full potential across a variety of industries, including fintech, transportation, purpose tech, future of work, health tech, and people tech (companies facilitating impact and change).
Techstars Rising Stars Fund
The Rising Stars Fund is a pre-seed venture capital fund that will make its first investments in underrepresented innovators of color in the United States in 2022. The fund is a component of the Techstars investment company, which offers early-stage entrepreneurs access to financing, individualized mentoring, and specialized training.
Hundreds of minority business founders have received funding from investors from the VC funds Amazon supports. With Amazon’s investments, these VC funds hope to support hundreds more businesses, which will boost employment and open up new opportunities for economic growth in previously underrepresented areas.
“We are focused on addressing financial inclusion across the globe, and Collide Capital has been an investor in us from the early days. Collide has helped us to shape our vision and opened up access to future rounds of funding,” said the founder and CEO of fintech startup EMTECH, Carmelle Cadet. “EMTECH discovered a unique value proposition in rebuilding central banking infrastructure for the Web3 era. As a Black woman-founded tech company, having Collide getting excited about our vision was critical to our journey. We are better with them as partners, and I am excited to see how Amazon is supporting them to help even more entrepreneurs like me.”
“Our collaboration with the team at Amazon was born out of our shared passion for innovation in key areas that improve the human experience at scale. We are aligned with Amazon’s customer obsession and grateful to be learning and collaborating with them to build a portfolio of game changing companies,” said Hamet Watt, managing partner at Share Ventures.
The newest program funded by Amazon to encourage and assist early-stage, underrepresented businesses is called Amazon Catalytic Capital. Amazon Web Services has introduced the AWS Impact Accelerator, spending $30 million in a number of initiatives aimed at fostering the success of high-potential pre-seed firms with founders who are underrepresented in the IT industry. Amazon selected entrepreneurs from North America to be a part of its 2022 Black Founders Build with Alexa cohort. Each startup will receive a $100,000 investment from the Alexa Fund as well as technical assistance. Additionally, in 2021, Amazon allocated $150 million to its Black Business Accelerator program, a program designed to assist Black entrepreneurs in becoming successful Amazon store sellers.
Visit amazoncatalyticcapital.com to learn more about Amazon Catalytic Capital. Funds interested in investing with Amazon can get in touch with them.