Amazon is Introducing Private Investors To High-Risk Startups in a New Pilot Program

Amazon is testing a new way to bolster its relationship with startups and possibly bring in more capital to the ecosystem. From a report: 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.

The Pro-Rata program is being run by Brad Holden, a former partner at TomorrowVentures (founded by ex-Google CEO Eric Schmidt), and Jason Hunt, who are both part of AWS's business development team focused on angel and seed relationships, according to an email they sent to investors in January. 'The Pro-Rata Program is a new pilot intended to connect family offices and venture capitalists for specific investment opportunities from the AWS ecosystem,' according to the email, which was viewed by CNBC. 'Pro rata' refers to the rights investors have to put money in subsequent rounds. Mike Isaac, a reporter at The New York Times, writes, 'If Amazon is using its direct knowledge of startups' health based on the fact that Amazon literally owns and operates the servers, how is this at all ethical? If that's not the case, Amazon should make that crystal clear (even though i'd have a hard time believing it). It's like Facebook's years of insights into [various] apps' data with the Onavo team, only instead of ripping companies off (which FB did), they invested in them.'

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