Does Amazon’s $1B Logistics Fund Signal Wider VC Slowdown?

More than a year after establishing the Amazon Industrial Innovation Fund (AIIF), the e-commerce giant’s commitment to investing $1 billion in fulfillment, logistics and supply chain businesses, a reported slowdown in funding has since shed light on a harsh reality—even businesses with deep pockets aren’t trying to force funding.

Since the fund launched in April 2022, Amazon has deployed about $110 million so far into businesses, The Wall Street Journal reported. Beyond the initial round of five companies announced during the project’s launch, the AIIF has made just two more public investments, but closed more undisclosed deals, the Seattle company said.

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Amazon would not confirm the WSJ report’s estimated investment total. But the current macroeconomic environment has seen venture capital dry up as investors rein in spending.

Venture capital funding into supply chain technology is down drastically in 2023, with first quarter totals amounting to $2.4 billion, a nearly 83 percent drop from $14 billion in the year-ago quarter, according to Pitchbook’s May Supply Chain Tech Report.

Total deals made fell 35 percent, from 301 to start 2022 down to 195 deals at the start of 2023.

The WSJ report pointed to ongoing disagreements between Amazon’s corporate development team, which has traditionally had authority over the company’s investments and acquisitions, and the venture team, to explain the slow pace of funding.

Sources quoted by WSJ indicated that the corporate development team wanted to funnel funding to more mature companies, while the venture department wanted to prioritize early-stage startups.

Amazon denied that departmental preferences determined the decision-making processes, saying the company targets more mature logistics and fulfillment businesses.

“It’s incorrect and misleading to claim that the Fund has been in any way negatively impacted by internal politics,” an Amazon spokesperson told Sourcing Journal. “In the year since its launch, Amazon has made a number of successful investments through the Industrial Innovation Fund. We’re excited by the pace at which we’re finding and supporting great companies that use new technologies in ways that reimagine customer fulfillment, logistics and the supply chain.”

The spokesperson added that Amazon’s corporate development and business teams work collaboratively to evaluate investment opportunities in both early startups and established later-stage companies.

“Our common theme is that we look to support novel technologies that can drive operational safety, employee engagement, and benefit to our customers,” the representative said.

According to the spokesperson, the speed and number of investments made with the fund “feel quite consistent with what you could expect in any other similar fund…To suggest that the pace of the fund investments is slow does not line up with what else you see out in the marketplace.”

Like many tech-driven businesses, Amazon has recently laid off thousands of workers, including in the robotics division responsible for warehouse automation.

The robotics division was and remains part of the venture team, Amazon said, indicating that it helps the corporate development team assess potential investments. Its impact was felt early on—three of the initially funded firms were robotics firms aimed at enhancing warehouse work.

Lower robotics headcount aligns with lower robotics investments.

The spokesperson said Amazon has yet to announce several investments, with other deals nearing completion.

Amazon has only publicly announced two more investments since the first five revealed with the fund’s debut. In March, it invested an undisclosed sum in Flymingo, a computer vision company that identifies supply chain mistakes in existing warehouse camera feeds. Two months later, Amazon was part of a $29 million funding round for another robotics company, Veo Robotics.

The three robotics firms Amazon initially invested in include Agility Robotics, BionicHive and Mantis Robotics. Agility Robotics is developing a bi-pedal walking robot, Digit, that addresses the mobility limitations of traditional robots so that machines can better aid people. BionicHive is an autonomous robotic solution that can adapt to existing shelving racks and boxes in warehouses and is capable of floor to ceiling functionality. Mantis Robotics offers a tactile robotic arm that uses sensor technology to work alongside people.

Amazon also invested in Modjoul, a wearable safety technology that enables real-time, personalized alerts and recommendations aimed at reducing injuries, most notably musculoskeletal issues—a consistent concern for Amazon warehouse workers. The fund’s final investment is Vimaan, a computer vision and artificial intelligence solutions company targeting inventory management.

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