Amazon announced yesterday the launch of Amazon Catalytic Capital, a $150 million commitment focused on investing in underrepresented technology developers. The initiative, according to a release, will invest in funds that support pre-seed and seed-stage startups developed by Black, Latino, Indigenous, women and LGBTQIA+ founders.
The goal is that the money will support more than 10 funds and, as a result, more than 200 companies in the next year. To date, recipients include Techstar’s $8 million pre-seed vehicle, Collide Capital, Share Ventures and Energy Impact Partners; that means there are six more slots open. In some ways, this is a continuation of Amazon’s investment in underrepresented founders, including the AWS Impact Accelerator, an initiative that provides more than $30 million to support underrepresented founders over the next three year. Last year, Amazon gave $150 million to its Black Business Accelerator.
The difference between those efforts and Catalytic Capital is that Amazon is now focused not just on supporting entrepreneurs, but on people supporting entrepreneurs, as well. Don’t worry, it still keeps its acquisition targets, ahem, I mean, portfolio startups, close at hand: Catalytic Capital’s money comes with mentorship from Amazon executives and other relevant sources ; the company also said it will work with portfolio startups to identify collaboration and product collaboration opportunities.
Catalytic Capital’s number pales in comparison to Amazon’s other corporate bets. It recently announced the first startups to receive money from its $1 billion industrial innovation fund. Amazon also launched a $2 billion Climate Pledge Fund in 2020 to invest in sustainable technologies and services that will help the company meet its commitment to be net-zero carbon in its operations by 2040. There is a history of corporations that do of commitments to foster change in a certain area or among a specific demographic. Last year, for example, Google announced a five-year, $1 billion plan to boost digital services across Africa.
Amazon’s entry into the fund of funds space supports a prediction I made a few months ago, where I said we would see more of these types of vehicles due to the softening of the late-stage market. Businesses want exposure to a burgeoning early stage, and instead of doing that themselves, they can rely on experimental investors to de-risk and even lead early reviews.