Amazon invests $230 million in generative AI startups

Amazon announced that it will invest up to $230 million in startups that develop generative AI applications. Of this investment, approximately $80 million will be used for the second AWS Generative AI Accelerator Program. The goal is to position AWS as the preferred cloud infrastructure for startups that develop generative AI models for their products, apps, and services.

Compute credits and partnerships

Much of this new investment, including the full amount for the accelerator program, will be provided in the form of compute credits for AWS infrastructure. These credits cannot be transferred to other cloud service providers such as Google Cloud and Microsoft Azure.

To make the offering more compelling, Amazon promises that startups in this year's Generative AI Accelerator cohort will have access to experts and technology from Nvidia, the program's presenting partner. They will also be invited to participate in the Nvidia Inception Program, which offers companies opportunities to connect with potential investors and additional sources of advice.

Growth of the accelerator program

The Generative AI Accelerator Program has grown significantly. Last year's cohort, which included 21 startups, only received up to $300,000 in AWS compute credits, representing a total investment of approximately $6.3 million.

“With this new effort, we will help startups launch and scale world-class companies, and provide the building blocks they need to unleash new AI applications that will impact all facets of how the world learns, connects, and does business,” Matt Wood, VP of AI products at AWS, said in a statement.

Challenges and Competition

Amazon's growing spending on generative AI technology comes as the company tries to catch up with tech giants in the booming and increasingly competitive generative AI space. While Amazon claims that its various generative AI companies have reached “multi-billion” sales, the company is widely seen as lagging behind in this area.

AWS originally planned to unveil its own generative AI model, similar to OpenAI's ChatGPT, at its annual conference in November 2022, but major bugs forced the organization to delay the launch. Amazon's Alexa division has also faced challenges, thanks to technical setbacks and political struggles.

Amazon also missed early opportunities to support two leading AI startups, Cohere and Anthropic. The company later tried to invest in Cohere but was turned down - and had to settle for co-investing in Anthropic with its main rival Google.

In addition to the recent departure of Howard Wright, the head of startups at AWS, one obstacle for Amazon is the growing control of Big Tech's investments in AI startups. The U.S. Federal Trade Commission recently opened an investigation into Microsoft's support for OpenAI, as well as Google and Amazon's investments in Anthropic. European policy makers have also indicated that they are skeptical about such deals.

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