Amazon is investing in outside venture capital funds for the first time, and plans to give $150 million to firms that are backing underrepresented founders, according to a statement on Wednesday.
The online retailer said it was aiming to put money into more than 10 funds that support some 200 companies at or before the seed stage of investment through 2023. Amazon said it was focused on Black, Latino, female, Indigenous and lesbian, gay, bisexual, transgender, queer, intersex and asexual LGBTQIA founders.
Nick Komorous, vice president of corporate development, said the company expects that the initiative will lead to financial return and new product development to benefit its customers, along with extra capital for those who don't have access.
There's a lot of data to support that these diverse groups and teams end up seeing more products reach market, he told Reuters. The need to be more critical is because investors are more cautious about the economy in its current state. A similar effort by PayPal Holdings Inc last year was to commit $100 million to funds and depository institutions in support of women.
Amazon has stumbled on diversity as an employer, recently losing two of its most senior Black leaders. It remains a small player in venture capital, dwarfed by rival Alphabet Inc, an arm of which has more than $8 billion under management.
The $200 million Alexa Fund is invested directly in voice-technology companies, according to the retailer's $200 million. Amazon faced scrutiny for launching products that competed with startups it backed.
Komorous said that Amazon would invest as a limited partner, not related to criticism, instead was a way to force multiply investing and reach earlier-stage entrepreneurs.
He said Amazon will not set up founders with its executives and other resources without taking a board seat, while leaving open a chance for direct investing in the future.
The company has so far made four bets through the Catalytic Capital initiative, including the Techstars Rising Stars fund, which offers $100,000 to entrepreneurs with deep-pocketed networks to start up bankroll fledgling startups.
It said it also invested in Collide Capital, Share Ventures and the Elevate Future Fund.