Amazon to Launch Pilot Program that Brings Investors, Start-ups Together

Amazon will launch a pilot program called the Amazon Web Services Pro-Rata Program, which is intended to link private investors with start-up companies. Amazon hopes the program will enhance its relationship with start-ups, as well as inject capital into the ecosystem.

The proposed program will be run by Brad Holden, who was a former partner at TomorrowVentures, and Jason Hunt, who are both part of AWS’s business development team that focuses on angel and seed relationships. This information was based on an email sent to investors earlier this year.

“The Pro-Rata Program is a new pilot intended to connect family offices and venture capitalists for specific investment opportunities from the AWS ecosystem,” the email said.

AWS’s business model has built a $25 billion venture centered on luring big companies and government agencies onto its cloud. It currently accounts for a majority of Amazon‘s profit.

When it started 10 years ago, AWS provided computing and storage services for start-ups. Previous start-up ventures like Lyft, Pinterest and Slack have transformed themselves into large enterprises wielding massive tech budgets.

Because investing in start-ups is typically a hit or miss affair, investors looking to get a piece of the action must exercise caution.

“While investments are sourced from managers we trust, participants are expected to perform their own due diligence on all investments,” the email said. “This pilot is intended to connect managers to discuss potential investments.”

Related: Semiconductor ETFs Climb on Broadcom Earnings, China Trade Talks

ETFs to Consider

Will Amazon’s pilot program allow start-ups to flourish with a fresh injection of capital and fuel growth in small companies?

For investors looking for continued upside in large cap equities over small caps, the Direxion Russell Large Over Small Cap ETF (NYSEArca: RWLS) offers them the ability to benefit not only from large cap equities potentially performing well, but from their outperformance compared to their small cap brethren.

Conversely, if investors believe that small cap equities will outperform large cap equities, the Direxion Russell Small Over Large Cap ETF (NYSEArca: RWSL) provides a means to not only see small cap stocks perform well, but a way to capitalize on their outperformance versus their large cap brethren.

For more relative market trends, visit our Relative Value Channel.