Why AWS is Investing $230m in Credits for Gen AI Startups

This move is seen as the tech giant aiming to set themselves up as cloud providers of the big companies of tomorrow
Amazon is investing US$230m in AWS cloud credits to entice Gen AI startups to get onboard with using its cloud services

Amazon is making plays to woo Gen AI startups by announcing a US$230m investment in AWS cloud credits for them to use. 

The credits will provide GenAI startups with access to AWS services, including compute, storage, databases, and AI-designed chips like Trainium and Inferentia2 chips. 

Additionally, startups can utilise Amazon SageMaker to build and train their own AI foundational models and leverage Amazon Bedrock for secure generative AI application development. 

"For more than 18 years, AWS has helped more startups to build, launch, and scale their business than any other cloud provider—it's no coincidence that 96 percent of all AI/ML unicorns run on AWS," Matt Wood, VP of AI Products at AWS said in a blog post accompanying the announcement.

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Startups have the industry’s eye

This move is seen as the tech giant aiming to attract early-stage companies and set themselves up as cloud providers of the big companies of tomorrow. 

By getting in customers early when they are new, there is a higher likelihood they will stay once they have blossomed into successful companies. 

Equally, AWS imposes charges to move data out of its data centres, making migrations difficult, expensive and not an option until a company has reached true maturity. 

This could prove prudent when considering the Gen AI ecosystem has witnessed remarkable growth.

According to a report by GP Bullhound, European AI companies received over €11 billion in funding in 2023 alone, with 36% of new unicorns emerging from the AI/ML sector. 

This trend is further exemplified by the surge in capital investments in GenAI startups worldwide. 

OpenAI, the trailblazing creator of ChatGPT and recipient of billions of dollars of investment from tech titans like Microsoft, is a startup, and was only created in 2016. As of 2024, the company is now valued at US$80bn and is doing deals with Big Four accounting firm PWC who will act as a reseller of its enterprise version of ChatGPT.

The business leading the stock markets of today will not necessarily be the business leading it tomorrow. One only has to look at Facebook (Meta), Tesla and Nvidia to see that. 

Other companies, like Northern Data, one of Nvidia's largest partners, has also seen the trend and as a result launched its inaugural AI Accelerator program to provide selected startups with complimentary access to state-of-the-art NVIDIA HGX H100 GPU servers.

By providing startups with access to high-performance computing solutions, programs like these aim to unlock the full potential of emerging ideas in the AI sphere, expanding the potential offerings in the AI market.

Startup Verband, a German Startup Association, study found that while global financing for startups fell by 57% between 2021 and 2023, it surged by 363% to €22.3bn (US$23.8bn) in the GenAI sector, which put AI as the most important sector in the ecosystem.

Sound investment in the cloud 

The challenges faced by GenAI startups, such as the high speed required in competition and access to infrastructure, contribute to their high capital requirements, and openness to take advantage of companies providing free or subsidised use of their systems.

As the demand for cloud computing and AI capabilities continues to surge, cloud providers are vying for a share of the lucrative GenAI market. 

Amazon's investment underscores the company's commitment securing early-stage clients in this rapidly evolving field. 

With the substantial financial resources required for successful scaling of startups, initiatives like Amazon's cloud credit program stand to be well received, and as a result, yield large returns from the initial cost. 

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