Amazon Web Services has close ties to the start-up community and is now testing a new program to give investors a chance to put money into young companies.
Amazon is testing a new way to bolster its relationship with start-ups and possibly bring in more capital to the ecosystem. The fledgling effort, known as the Amazon Web Services Pro-Rata Program, is designed to link private investors with companies that use AWS, as well as venture funds whose portfolios are filled with potential cloud customers. Amazon is not investing money through the program.
AWS has built a $25 billion enterprise tech behemoth by luring big companies and government agencies onto its cloud, and it now accounts for the bulk of Amazon's profit. Ever since getting off the ground over a decade ago by providing computing and storage services for start-ups, AWS has counted on young and emerging companies for a big part of its success.
For each, investors had to commit a minimum amount by late January, and were told they'd be investing through a fund. For example, Torch Ventures had a $20 million allocation for the Roman financing round, and investors could participate in that specific fund if they were willing to put in at least $500,000. There's no management fee, but investors agree to pay 10 percent of the carried interest to Torch if returns are up to 1.
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