Amazon Sets Out to Deliver As a Limited Partner

By David G. Barry

Amazon has a new line of business: investing in venture capital funds.

The online retail giant has established Amazon Catalytic Capital to invest $150 million in VC funds, incubators, accelerators, and venture studios that provide funding to entrepreneurs from underrepresented backgrounds.

Amazon will invest in funds that focus on Black, Latino, Indigenous, women and LGBTQIA+ founders. It said it expects to support more than 10 funds and over 200 companies through the next year.

Olivia Jacobs, an Amazon spokesperson, tells Markets Group that the initiative is the corporation’s “first dedicated effort to invest directly in VC funds as a [limited partner].”

To date, Amazon has used Catalytic Capital to invest in funds from four firms: Collide Capital, a Black-owned seed and pre-seed venture capital fund; Elevate Future Fund, which focuses on backing underrepresented founders working on solutions aimed at accelerating a more sustainable and clean future; Share Ventures, which is focused on human performance; and Techstars Rising Stars Fund, a pre-seed fund investing in underrepresented founders of color.

In addition to capital, the companies in the funds’ portfolios will receive mentorship from Amazon executives and gain access to resources to support their business and technical strategy. Amazon will also work with the startups to identify partnership and product collaboration opportunities.

The effort is aimed at helping groups that have traditional struggled to attract capital. Women founders, according to PitchBook, received 2% of venture funding in 2021 while Black-founded and Latino-founded startups attracted only 1% and 2%, according to Crunchbase News.

In a prepared statement, Peter Krawiec, Amazon’s senior vice president of worldwide corporate development, said Amazon has “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.”

Amazon joins a growing list of institutional investors with programs aimed at backing funds investing in diverse entrepreneurs or funds led by diverse teams.

Massachusetts Mutual Life Insurance Company (MassMutual), for instance, announced that it is investing an additional $100 million in diverse, first-time fund managers. MassMutual had previously invested $50 million through the First Fund Initiative, which is focused on funds led by Black, Latinx and Indigenous fund managers focused on generating positive social impact and financial returns.