Amazon (AMZN stock) 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+ entrepreneurs. Amazon.com Inc (NASDAQ:AMZN) anticipates supporting over 200 businesses and over ten funds for the upcoming year.
“We’ve witnessed some incredibly creative ideas from underrepresented entrepreneurs, from businesses that provide inclusive health services for women to startups that assist businesses in reducing the impact of climate change on underserved communities. We’re convinced that an inclusive investment strategy fosters innovation and better returns. We want to make sure that the founders of these businesses and everyone else has equal access to finance, “Peter Krawiec, senior vice president of global corporate development at Amazon, said. We believe that our investment will be catalytic—sparking a force-multiplying effect by motivating others to invest in these businesses, encouraging inclusivity and creativity, having a good influence on communities, and generating a financial return.
Future Plans of Amazon (AMZN stock)
In addition to funding, the businesses in the funds’ portfolios will have access to tools to assist their technical and business strategies and mentoring from Amazon (AMZN stock) executives. Teams from Amazon will also work with the companies to find potential joint ventures and product collaborations that might speed up their development.
In the past, minority founders have had higher challenges in obtaining funds to realize their ideas and less access to startup venture capital. Studies repeatedly demonstrate the underrepresentation of Black, Latino, female, and LGBTQIA+ business founders in the total number of financed startups. Women founders got 2% of venture capital investment in the United States in 2021, according to PitchBook. Similarly, according to Crunchbase News, just 1% and 2% of U.S. venture capital financing went to firms led by Black and Latino founders, respectively. According to research, these discrepancies have a detrimental 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 segments and have a 75% higher chance of seeing ideas become products.
Amazon (AMZN stock) has made the following investments through this project:
- Collide Capital is a Black-owned seed and pre-seed venture capital firm run by two entrepreneurs under the age of 35: Brian Hollins, a founding member of BLCK VC, and Aaron Samuels, who co-founded AfroTech. Collide capital has supported over 40 businesses, 80% or more of which include Black, Latino, or female founders at the helm.
- Elevate Future Fund: Elevate Future Fund, managed by Energy Impact Partners (EIP), aims to provide more capital to underrepresented innovators developing ideas to hasten the transition to a future with cleaner, more sustainable energy sources. Additionally, it will invest in minority entrepreneurs-run businesses, empowering diverse talent and providing struggling or underprivileged areas with economic opportunities. Elevate will work closely with Amazon’s Climate Pledge Fund, which finances startups 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 various industries, including finance, transportation, purpose tech, future of work, health tech, and people tech (companies facilitating impact and change).
- Technology Stars 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 entrepreneurs have received funding from investors from the VC funds Amazon (AMZN stock) supports. With Amazon’s investments, these VC firms want to support hundreds more businesses, boosting employment and opening up new economic growth opportunities in previously underrepresented areas.
“Collide Capital has been an investor in us since the beginning, and we are committed to tackling financial inclusion on a global scale. Collide has aided us in defining our goals and provided access to upcoming fundraising rounds, “said Carmelle Cadet, the founder, and CEO of the financial business EMTECH. “Rebuilding central banking infrastructure for the Web3 age allowed EMTECH to find a distinctive value proposition. Getting Collide fired up about our goal as a tech business established by a Black woman was essential to our progress. They make us stronger as partners, and I’m thrilled to see how Amazon is assisting them to empower other business owners like me.”
“Our partnership with the Amazon team was sparked by our mutual enthusiasm for innovation in significant fields that enhance the human experience broadly. We share Amazon’s (AMZN stock) focus with the customer and are thrilled to be working and learning with them to develop a portfolio of game-changing businesses, “the managing partner of Share Ventures, Hamet Watt, stated.
Amazon Catalytic Capital is the newest program funded by Amazon to encourage and assist early-stage, underrepresented businesses. Amazon Web Services has introduced the AWS Impact Accelerator, spending $30 million on initiatives to foster 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 firm will get a $100,000 investment from the Alexa Fund and technical assistance. Additionally, in 2021, Amazon (AMZN stock) allocated $150 million to its Black Business Accelerator program, designed to assist Black entrepreneurs in becoming successful Amazon (AMZN stock) store sellers.
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