Amazon’s venture funds offer a great lesson for any enterprise looking to benefit from digital ventures. Funding and launching digital ventures that compliment your existing strategies and initiatives is the key to staying ahead in a multifaceted modern economy.
Once merely an online book retailer, over the past two decades Amazon grew into one of the top businesses in the world. Their diversification is stunning, with profitable divisions involved in mobile devices, cloud services, media streaming, content production, and more.
With all this diversification, why doesn't Amazon have a venture fund?
Throughout most of their history, however, Amazon stayed away from creating their own venture funds, unlike many of their competitors. However, this strategy has changed over the past several years. They now selectively invest in emerging companies creating digital ventures compatible with Amazon’s long-term goals.
Amazon’s venture funds offer a great lesson for any enterprise looking to benefit from digital ventures. Funding and launching digital ventures that compliment your existing strategies and initiatives is the key to staying ahead in a multifaceted modern economy. Perhaps the next Jeff Bezos boasts an exceptional idea about to go dominant in the 2020s?
The Amazon Echo introduced the company’s own voice-activated assistant, Alexa. Of course, Apple first popularized the concept with Siri on the iPhone and iPad. Now Alexa is commonplace across a variety of Amazon’s mobile devices and services. To foster innovation in this area, the company created its own venture fund, known as The Alexa Fund.
The Alexa Fund invests up to $200 million in companies working in the field of voice recognition. Amazon feels that human voice recognition plays a key role in improving the way users interact with technology. Ultimately, this voice-activated approach becomes second nature, with assistants like Alexa and Siri essentially becoming valuable partners for people normally challenged by technology.
The innovators currently receiving assistance from The Alexa Fund advance the technology in a variety of ways. For example, Vesper builds state of the art microphones to provide voice assisted functionality in places never thought possible, including garbage cans. The Vesper technology also filters unwanted noise to better focus on recognizing the human voice.
Another company supported by The Alexa Fund is Endel. The German-based company crafts audio environments based on an emerging concept called ambient computing. One of their products is a smartphone app that generates personalized sound environments allowing the user to relax, sleep, or focus.
Considering the massive populations within Asia, it’s not surprising Amazon created a venture fund for Indian startups. The Amazon Smbhav Venture Fund is a $250 million fund focused on startups driving the digital transformation of small to medium-sized businesses in India. The goal is to help smaller businesses engage in eCommerce, automate their operations, and eventually reach a global market.
One of the companies supported by the fund is M1xchange, located in Gurgaon, India. M1exchange provides a marketplace exchange allowing Indian SMBs to connect with banking and financial providers. By combining multiple small businesses in this fashion, all exchange companies benefit from lower interest rates and other financing benefits.
Amazon also plans on investing in Indian startups in the healthcare and agriculture business sectors. This approach makes sense as healthcare technology is a growing market in the U.S. and Europe, driven by advancements in telehealth and AI-assisted diagnoses. Amazon also plans on supporting companies providing technology support to farmers with the hopes of reducing food wastage and improving the quality of produce.
While these startups all present the potential for massive returns for Amazon, the retail giant will also benefit from improving the Asian market as they expand their eCommerce footprint in the area.
Speaking of footprints, clean energy and environmental initiatives are the focus of another new Amazon venture capital fund. The Climate Pledge Fund is investing $2 billion in environmentally-focused startups and companies in a variety of business sectors. These include transportation, energy, battery storage, as well as food and agriculture. These investments support Amazon’s plan to become carbon neutral by 2040.
Amazon described their billions in funding as an initial investment. The company stated the amount might grow over time. Industry pundits feel this new fund makes Amazon one of the top players in new energy investments. In 2019, the entire clean energy market received total investments of $10.5 billion. Ultimately, Amazon contributing its own dollars with The Climate Pledge Fund definitely boasts the potential to make a significant difference in this area.
Amazon’s recent venture fund investments reveal multiple larger strategies. Investing in expanding underserved markets makes sense from a growth standpoint. Improving the applications of technology also provides a similar opportunity. Finally, investing in clean energy initiatives ultimately benefits the entire planet.
NineTwoThree follows a similar strategy with our internally funded digital ventures. Launching successful mobile and web applications improves the overall market and gives our team experience in all aspects of launching a digital venture which we can apply to our clients. Our tangible experience in transforming other companies’ great ideas into successful app experiences makes us the perfect partner.