Amazon will Invest $150 Million in Funds that Provide Capital to Underrepresented Entrepreneurs

Published on: 07 October 2022
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Amazon Catalytic Capital is a new initiative that will invest $150 million in venture capital (VC) funds, accelerators, incubators, and venture studios that provide funding to entrepreneurs from underrepresented backgrounds, mainly at the pre-seed/seed stage.

The company will invest in funds that support Black, Latino, Indigenous, women, and LGBTQIA+ entrepreneurs. Amazon looks forward to supporting more than ten funds and over 200 companies over the next year.

Peter Krawiec, Amazon’s senior vice president of worldwide corporate development, said: 

"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.

"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 capital, the companies in the funds' portfolios will be mentored by Amazon executives and given access to resources to help them with their technical and business strategies. Amazon teams will also collaborate with the startups to discover partnership and product collaboration opportunities that could help them grow faster.

Historically, underrepresented founders have had less access to startup venture capital and faced greater challenges in obtaining finance to bring their ideas to fruition. 

According to studies, Black, Latino, women, and LGBTQIA+ startup founders are underrepresented in the total number of funded startups. According to PitchBook, women founders received 2% of venture capital funding in the United States in 2021. Similarly, according to Crunchbase News, Black-founded and Latino-founded startups received only 1% and 2% of US venture capital funding, respectively, last year.

Research shows that these inequities create a negative ripple effect for underrepresented entrepreneurs, including reduced access to networks, mentors, and sponsors. Despite these challenges, diverse and inclusive teams are 75% more likely to see ideas become products and 70% more likely to serve new categories.

Hundreds of underrepresented startup founders have received funding from Amazon-backed VC funds. With Amazon's investment, these VC funds hope to back hundreds more companies, thereby creating more jobs and unlocking economic growth in historically underserved communities.

Amazon Catalytic Capital is the most recent in a long line of Amazon-sponsored initiatives aimed at boosting and supporting early-stage, underrepresented entrepreneurs. 

Amazon Web Services recently established the AWS Impact Accelerator, a $30 million investment in a series of initiatives aimed at assisting high-potential, pre-seed startups led by underrepresented founders in succeeding. 

Amazon selected North American startups for its 2022 Black Founders Build with Alexa cohort, each receiving a $100,000 Alexa Fund investment as well as technical assistance. Amazon also committed $150 million to its Black Business Accelerator in 2021, an initiative designed to help Black business owners succeed as Amazon sellers.

Source: Business Wire

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