AWS launches new $30 million acceleration program for minority founders – TechCrunch
Amazon Web Services (AWS) today launched a new program, AWS Impact Accelerator, which will award up to $30 million to early-stage startups led by Black, Latino, LGBTQIA+, and female founders. The Amazon company says the three-year initiative will help grantees build successful businesses while “accelerating” growth in their respective markets. But critics argue that AWS Impact Accelerator doesn’t go far enough to support historically marginalized entrepreneurs.
From a diversity perspective, the venture capital funding landscape remains incredibly lopsided. Since 2015, the founders of Black and Latinx — who have fewer funding avenues available to them to get started — have raised just 2.4% of total venture capital invested, according to Crunchbase. The current system capitalizes women and minority founders 80% less than all companies. But miraculously, around 80% of investors believe women and minority business owners are getting the capital they deserve, highlighting the disconnect.
Amazon says AWS Impact Accelerator will award eligible pre-seed startups up to $225,000 (a cash grant of $125,000 and up to $100,000 in AWS service credits), plus training, mentoring and technical advice. Attendees will also receive introductions to Amazon executives and teams, networking opportunities with potential investors and ongoing advisory support, as well as access to a virtual community of AWS experts.
Partner organizations include those working with Black, Latino, LGBTQIA+ and women founders, including Black Women Talk Tech, Digitalundivided, StartOut, Backstage Capital and Lightship Capital.
“Once accepted into the eight-week program, participants will create an extensive, personalized training program 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 decision making’ and ‘backworking’ to make day-to-day decisions and build agile and innovative teams… The program will also prepare startups to enter seed -stage accelerators that work closely with AWS, such as Visible Hands.
Os Keyes, one oneassistant professor of computer science at Seattle University, takes issue with how AWS Impact Accelerator distributes funds — and the size of the program relative to AWS earnings. He points out that the $30 million, half of which is AWS credits, is only a small fraction (0.04%) of AWS’s projected annual revenue rate of $71 billion for 2022. Keyes notes that AWS Impact Accelerator startups, as is the case with many accelerators run by tech giants, risk being blocked by customers: the choice to use Amazon’s platform or spend the equivalent of substantially all of the subsidy for comparable services elsewhere.
“[Of] of course they’re going to use the Amazon platform, then when the free credits run out they’ll have to either move all their stuff to a different platform or give a lot of the money back…to Amazon. It’s basically a full-scale ‘buy one get one free’ McDonald’s coupon,” Keyes told TechCrunch via email. “It’s 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 anything After symbol on the noun.
In a statement, AWS CEO Adam Selipsky pushes back against such criticism, saying AWS is “committed” to helping underrepresented founders “achieve success 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 is more than just talk. But the question is whether they go far enough to address the institutionalized disadvantages faced by minority founders.
A report found that minority tech startups in the United States saw virtually no progress in venture capital funding from 2013 to 2020. In a January article for Crunchbase, Kinsey Wolf, a split CMO at Chisos Capital, suggests several potential solutions, including cultivating an ecosystem that supports minority founders and holds traditional funding avenues accountable to diversity, equity, and inclusion criteria.
“[The community needs to establish] new funds led by and built for minority founders, [develop] social groups where minority founders can get in touch with sympathizers, [and continue] to challenge conscious and unconscious biases in the world of startup funding,” Wolf wrote. “Since banks and venture capitalists control the majority of available start-up capital, they must be part of the solution.”
Applications are open today for the first AWS Impact Accelerator for Black Founders, according to Amazon, with the program launching in June for US-based startups. The first AWS Impact Accelerator for Women Founders will take place in the second half of the year for US-based startups. The AWS Impact Accelerator for LGBTQIA+ Founders and the AWS Impact Accelerator for Latino Founders will follow in 2023.