Amazon Web Services (AWS) today launched a new program, AWS Impact Accelerator, that will give up to $30 million to early-stage startups led by Black, Latino, LGBTQIA+ and women founders. The Amazon company claims that the three-year initiative will help recipients build successful businesses while “accelerating” growth in their respective markets. But critics contend that AWS Impact Accelerator doesn’t go far enough in supporting historically marginalized entrepreneurs.
From a diversity standpoint, the venture capital financing landscape remains incredibly imbalanced. Since 2015, Black and Latinx founders — who have fewer funding routes available to them to begin with — have raised just 2.4% of total venture capital invested, according to Crunchbase. The current system capitalizes women and minority founders at 80% less than businesses overall. But miraculously, about 80% of investors believe that minority and women business owners get the capital they deserve — spotlighting the disconnect.
Amazon says that AWS Impact Accelerator will award qualifying pre-seed startups up to $225,000 (a $125,000 cash grant and up to $100,000 in AWS service credits) as well as training, mentoring and technical guidance. Participants will also get introductions to Amazon leaders and teams, networking opportunities with potential investors and ongoing advisory support, plus access to a virtual community of AWS experts.
Partner organizations include those that work with Black, Latino, LGBTQIA+ and women founders, including Black Women Talk Tech, Digitalundivided, StartOut, Backstage Capital and Lightship Capital.
“On acceptance into the eight-week program, participants will create a wide-ranging, personalized training curriculum from dozens of available sessions delivered by AWS startup experts and guest speakers,” Amazon details in a press release. “Startups will also learn how to use Amazon processes such as ‘two-way door decision making’ and ‘working backwards’ to drive day-to-day decisions and build nimble, innovative teams … The program will also prepare startups for entry into seed-stage accelerators that work closely with AWS, such as Visible Hands.”
Os Keyes, an adjunct philosophy professor at Seattle University, takes issue with the way AWS Impact Accelerator distributes funds — and the size of the program relative to AWS’ profits. They point out that the $30 million, half of which is AWS credits, is a small fraction (0.04%) of AWS’ projected $71 billion annual revenue run rate for 2022. Moreover, Keyes notes that startups in AWS Impact Accelerator, as is the case with many accelerators run by tech giants, risk customer lock-in: a choice of using Amazon’s platform or spending the equivalent of almost the entire grant money on comparable services elsewhere.
“[Of] course they’re going to use the Amazon platform, and then when the free credits run out, they have to either port all of their stuff over to a different platform or give a lot of the money… back to Amazon. This is basically a McDonald’s ‘buy one get one free’ coupon at scale,” Keyes told TechCrunch via email. “This the equality and diversity equivalent of spitting on a house fire. Strictly speaking, it’s better than nothing, but you’d be hard-pressed to find something that’s more symbol over substantive.”
In a press release, AWS CEO Adam Selipsky preemptively pushes back against these criticisms, saying that AWS is “committed” to helping underrepresented founders “succeed and build powerful cloud solutions” that “capture the attention of investors and customers.” In truth, the reality probably lies somewhere in the middle. Programs like AWS Impact Accelerator amount to more than lip service. But it’s a question of whether they go far enough to combat the institutionalized disadvantages that minority founders face.
One report found that minority tech startups in the U.S. saw almost no progress in venture capital funding from 2013 to 2020. In a January piece for Crunchbase, Kinsey Wolf, a fractional CMO at Chisos Capital, suggests several potential solutions, including cultivating an ecosystem that supports minority founders and holding traditional funding avenues accountable to diversity, equity and inclusion benchmarks.
“[The community needs to establish] new funds led by and built for minority founders, [develop] social groups where minority founders can connect with supporters, [and continue] to challenge conscious and unconscious bias in the startup funding world,” Wolf wrote. “Since banks and venture capital firms control the majority of available startup capital, they need to be part of the solution.”
Applications open today for the first AWS Impact Accelerator for Black Founders, Amazon says, with the program kicking off in June for U.S.-based startups. The first AWS Impact Accelerator for Women Founders will take place in the second half of the year for U.S.-based startups. The AWS Impact Accelerator for LGBTQIA+ Founders and AWS Impact Accelerator for Latino Founders will follow in 2023.