Amazon doubles the value of credits for startups to build on the AWS cloud

Amazon will double the value of the credits it offers some startups for using its cloud infrastructure, CNBC has learned, as the company faces increased competition from Microsoft in the service of artificial intelligence.

Starting July 1, startups that closed a Series A funding round last year will be able to get $200,000 in loans through the AWS Activate program, up from $100,000 previously, Amazon’s cloud division said in an email to venture capitalists this week. Seed-stage startups will still be able to get $100,000 in loans, according to AWS.

Two people briefed on the changes confirmed the credit increase but asked to remain anonymous because the information is confidential.

Matt Garman, who was recently promoted to CEO of AWS after previously overseeing sales and marketing, met with founders in Silicon Valley this week, the people said. Garman told the executives that working with startups will always be a key focus, one of the people said, adding that Garman described AI companies as AWS’s ideal customers.

An AWS spokesperson confirmed the credit increase and Garman’s visit to Silicon Valley. The spokesperson added that in the past, the $100,000 credit expired after one year, while the $200,000 credit will now expire after three years.

Amazon, best known for its massive online retail business, generates most of its profits from AWS, a business it launched in 2006, long before rivals Microsoft and Google entered the scene. AWS is the market leader, posting revenue of $25 billion in the first quarter, up 17 percent from the previous year.

But Microsoft Azure and Google Cloud are growing faster and benefiting from rapidly evolving AI models. With Microsoft’s support, OpenAI launched ChatGPT on Azure in late 2022 and has since attracted a wave of AI workloads to Microsoft from companies large and small. Google has a number of great language models, most notably Gemini.

Amazon is trying to catch up in the field of generative AI and has pumped billions of dollars into OpenAI challenger Anthropic.

Last month, AWS CEO Adam Selipsky announced his retirement after three years at the helm and named Garman as his successor. During Selipsky’s time at the helm, Microsoft and Google increased their share of the cloud infrastructure market, with one analyst telling CNBC that Microsoft had “outpaced” AWS in generative AI.

Startups have long been fertile ground for cloud infrastructure companies as they seek to attract ambitious founders who could build the next multi-billion dollar company.

In November, Microsoft announced a partnership with Silicon Valley accelerator Y Combinator that will offer participating startups $350,000 in Azure credits and access to graphics processing units (GPUs) for training AI models, a spokesperson said. Microsoft has since expanded the $350,000 credit incentive to other accelerators, including the AI ​​Grant.

Startups participating in Microsoft’s Founders Hub program, which does not require prior venture capital funding, can receive up to $150,000 in Azure credits over four years.

In addition to its Activate offering, Amazon is offering a new 10-week generative AI accelerator program. Participants can access up to $1 million worth of cloud credits, according to the website.

On Friday, Amazon’s chief scientist Rohit Prasad told employees that the company had hired David Luan, co-founder and CEO of AI startup Adept, and several of his colleagues. “Amazon is also licensing Adept’s agent technology, a family of cutting-edge multimodal models, and some data sets,” Adept said in a blog post.

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