Amazon commits $230M to boost generative AI startups

Amazon has announced a commitment of up to $230 million to support startups developing generative AI-powered applications.

With approximately $80 million allocated to Amazon’s second AWS Generative AI Accelerator program, this significant investment aims to position AWS as the preferred cloud infrastructure for startups creating generative AI models for their products, applications, and services.

AWS Generative AI Accelerator program

A substantial portion of the new funding, including the entirety of the amount designated for the accelerator program, will be provided as compute credits for AWS infrastructure. These credits are non-transferable to other cloud service providers like Google Cloud and Microsoft Azure.

To enhance the program, Amazon is ensuring that startups in this year’s Generative AI Accelerator cohort will have access to experts and technology from Nvidia, the program’s presenting partner. Additionally, these startups will be invited to join the Nvidia Inception program, which offers opportunities to connect with potential investors and gain additional consulting resources.

Growth of the Generative AI Accelerator Program

The Generative AI Accelerator program has seen substantial growth. Last year’s cohort, consisting of 21 startups, received up to $300,000 in AWS compute credits, totaling an investment of around $6.3 million.

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

Amazon’s broader generative AI efforts

Amazon’s increasing investment in generative AI technology includes initiatives such as the $100 million AWS Generative AI Innovation Center, free credits for startups utilizing major AI models, and its Project Olympus model.

These efforts come as Amazon strives to catch up with tech giants in the rapidly growing and competitive generative AI space. Although Amazon claims that its generative AI businesses have reached “multiple billions” in run rate, the company is often viewed as lagging behind.

Challenges and setbacks

AWS initially planned to unveil its generative AI model similar to OpenAI’s ChatGPT, code-named Bedrock, at its annual conference in November 2022. However, significant bugs delayed the launch, transforming Bedrock into Amazon’s model hosting service. Despite Amazon PR’s dispute, the postponement highlights some challenges.

The Alexa division has encountered its own issues, including technical difficulties and internal conflicts, as Fortune’s Sharon Goldman reported. Despite a high-profile press demonstration of a “next-gen” Alexa nine months ago, the updated version is still not ready for release due to insufficient training data, inadequate access to training hardware, and other obstacles.

Missed opportunities and regulatory scrutiny

Amazon also missed early investment opportunities in leading AI startups Cohere and Anthropic. After being rejected by Cohere, Amazon co-invested $4 billion in Anthropic alongside Google. This co-investment reflects Amazon’s attempts to stay competitive in the AI startup investment landscape.

Compounding these challenges is the recent departure of Howard Wright, AWS’ head of startups, who managed relationships with startups. Furthermore, Amazon faces growing scrutiny from regulators regarding Big Tech’s investments in AI startups.

The U.S. Federal Trade Commission has opened an inquiry into Microsoft’s backing of OpenAI and Google and Amazon’s investments in Anthropic. European policymakers have also expressed skepticism towards such deals, adding another layer of complexity to Amazon’s generative AI ambitions.

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