Amazon.com Inc is investing in outside venture capital funds for the first time, saying on Wednesday it planned to hand $150 million to firms that are backing underrepresented founders.
The online retailer said it is aiming to put money into more than 10 funds supporting some 200 companies at or before the seed stage of investment, through 2023. It is focused on Black, Latino, female, Indigenous and lesbian, gay, bisexual, transgender, queer, intersex and asexual (LGBTQIA+) founders, Amazon said.
The company expects the initiative will lead to a financial return and new product development to benefit its customers, coupled with extra capital for those lacking access, said Nick Komorous, vice president of corporate development, according to Reuters.
"There's a lot of data to support that these diverse groups and teams end up seeing more products reach market," he told Reuters. At the same time, "investors are being more cautious with the economy in its current state, so the need's even more critical."
The news follows a similar effort by PayPal Holdings Inc (PYPL.O) last year committing $100 million to funds and depository institutions in support of women.
Amazon has at times stumbled on diversity as an employer, recently losing two of its most senior Black leaders. It also remains a small player in venture capital, dwarfed by rival Alphabet Inc, an arm of which has more than $8 billion under management.
The retailer's now $200-million Alexa Fund has directly invested in voice-technology companies. However, Amazon faced scrutiny for launching products that competed with startups it backed.
Komorous said news that Amazon would invest as a so-called limited partner was unrelated to criticism and instead a way to "force multiply" investing and reach earlier-stage entrepreneurs.
Amazon will 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, he said.
The company so far has made four bets through the "Catalytic Capital" initiative, including in the Techstars Rising Stars fund, which offers $100,000 to entrepreneurs without deep-pocketed networks to bankroll fledgling startups, according to its website.
Amazon also invested in Collide Capital, Share Ventures and the Elevate Future Fund, it said.