Amazon Web Services CEO Matt Garman thinks about startups more than you might expect. Garman, who stepped into the role in June, sees startups as customers, partners, and, in some sense, as Amazon’s future.

“Startups are the enterprises of the future,” he told Fortune. “Pinterest was a startup, Netflix was a startup, Rivian was a startup. X-energy is a startup…So, we want to be a part of helping them grow, helping them build on AWS, and helping them grow their company.”

Every 10 minutes a startup around the world joins AWS Activate, a program that offers startups cloud credits and mentorship, among other things. The program was founded in 2013, and has since helped 280,000 startups, providing more than $6 billion in credits. Amazon says that, today, 80% of PitchBook-listed unicorns run on AWS.

Garman notes that AWS learns a lot from startups, who are often “at the bleeding edge of technology” and “looking around corners.” This helps AWS improve its own services to better support startups and its broader customer base.

Garman has taken the reins at AWS at an interesting moment in the cloud business, as the AI boom drives up the need for computing power.

In December, AWS held its annual summit in Las Vegas, AWS re:Invent, which featured new partnerships with a wide range of startups. One of those startups, Redpoint-backed unicorn Poolside, announced plans to include its models on AWS Bedrock and leverage AWS Trainium chips. Jason Warner, cofounder and CEO of Poolside says AI training and inference have made securing reliable cloud computing horsepower more important than ever.

“These models are so large, and the resource requirements to train them and run them are so large,” Warner told Fortune. “You can’t just work with any old partner. This is actually one of those weird things where a startup really requires so much out of their other partner.”

Luma AI’s founder and CEO Amit Jain echoes the sentiment:

“Think about it this way: My business has only two inputs, talent and compute,” Jain told Fortune. “Honestly, talent, I got it right. But the second thing is that you need to be able to find reliable compute, where it doesn’t stand in your way…Video images are insanely compute-intensive, right? We think this next generation of AI is going to drive the majority of demand on compute.”

Garman acknowledged the growing costs for startups, but predicted that costs would come down—and in turn, create even more demand.

“Today, inference is just too expensive,” said Garman. With smaller models, creative techniques like “distilling,” and new inventions, Garman predicts that inference costs will drop by “an order of magnitude”—and the amount of AI inference being done by companies will increase by three orders of magnitude.

This year, AWS doubled down on startups in an effort to solve another problem—powering an AI future. “I think that type of collaboration allows us to prosper together,” said David Roldan, AWS head of startup business development in EMEA. In October, Amazon announced it would invest more than $500 million in two nuclear energy-focused companies: X-energy is a Maryland-based small modular reactor (SMR) startup and Washington-based Energy Northwest. The company also has a third project with Virginia-based Dominion Energy.

And it all connects together. There’s potential for small modular reactors (SMRs) to rise as a safe and scalable nuclear technology that can be placed closer to data centers—in many ways, the bread and butter of AWS. Garman says he believes nuclear power can provide the 24/7 power needed to support Amazon’s data centers and other always-on applications.

Nuclear energy has been gaining momentum across Big Tech. It’s a high-potential energy source with a longstanding perception problem. High-profile incidents like Chernobyl and Fukushima have left lasting impressions on public consciousness, but nuclear power is evolving.

“Technology and the costs are really coming to a place where it’s being competitive,” Garman told Fortune. “Most of these SMRs, we estimate that they’ll be ready for production use, sometime around 2030, give or take…It’s not a new technology, but it’s getting to the point where they’ve solved some really hard problems. It’s becoming realistic. It’s now something you can actually go and plan to implement.”

X-energy CEO J. Clay Sell told Fortune via email: “Amazon needs clean, safe, secure electricity as it scales its data center growth and experiences higher power demand. We see this collaboration as an exciting opportunity to advance not only Amazon’s data center and net-zero goals.”

Garman knows you can’t build the future if you can’t afford to power it. And startups can provide answers to Amazon’s future, while also being a key part of its past.

“When we started AWS 18 years ago…[startups] were our first customers,” said Garman. “They continue to be a super important set of customers that we invest in.”

More AWS…If you want to read more about AWS and Garman, my colleague Jason Del Rey dropped a great profile of him this week. Read the whole story here.

See you Monday,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Correction, December 20, 2024: The email version of this newsletter included an incorrect figure about the number of nuclear projects Amazon invested $500 million in. It has been corrected.

VENTURE DEALS

- OURA, an Oulu, Finland-based smart ring developer, raised $200 million in Series D funding from Fidelity Management & Research Company and Dexcom.

- Decart, a San Francisco-based AI efficiency research lab, raised $32 million in Series A funding. Benchmark led the round and was joined by existing investors Sequoia Capital and Zeev Ventures.

- Lens, a London-based blockchain L2 network, raised $31 million in funding. Lightspeed Faction led the round and was joined by Alchemy, Avail, Circle, angel investors, and others.

- Backflip, a San Francisco-based AI-powered 3D design software developer, raised $30 million in funding. NEA and Andreessen Horowitz led the round and were joined by angel investors.

- Justt, a Tel Aviv-based AI-powered chargeback solution, raised $30 million in Series C funding. Zeev Ventures led the round and was joined by existing investors Oak HC/FT and F2 Venture Capital.

- Scripta Insights, a Wellesley, Mass.-based pharmacy navigation platform, raised $17 million in Series B funding. Aquiline led the round and was joined by Contour Venture Partners, Eastside Partners, and ReMY Investors.

- Bluenote, a San Francisco-based regulatory workflow AI platform for life sciences companies, raised $10 million in funding. Lux Capital led the round and was joined by Elad Gil, Anthropic & Menlo Ventures Anthology Fund, McKesson Ventures, and others.

- Cadstrom, a Montreal, Canada-based AI-assisted electronic devices design system, raised $6.8 million in seed funding. Bison Ventures led the round and was joined by Innovation Endeavors and AI2 Incubator.

- Smartr365, a London-based mortgage platform, raised £5 million ($6.3 million) in funding. Pembroke VCT led the round and was joined by Smart Currency and Calculus Capital.

- Starboard, a Toronto-based AI-powered global trade logistics solutions provider, raised $5.5 million in seed funding. Eclipse led the round and was joined by Garuda Ventures and Everywhere Ventures.

- Tenor, a San Francisco-based leadership development AI platform, raised $5.4 million in seed funding. Base10 Partners led the round and was joined by Reach Capital and angel investors.

PRIVATE EQUITY

- Counsel Press, a portfolio company of Align Capital Partners, acquired Case Anywhere, a Woodland Hills, Calif.-based cloud-based legal case management services provider. Financial terms were not disclosed.

- Halifax Group acquired a majority stake in Q-mation, a Horsham, Pa.-based industrial automation software and hardware distributor. Financial terms were not disclosed.

- Rainier Partners acquired Welfare & Pension Administration Service, a Mercer Island, Wash.-based multi-employer benefit plan third-party administration firm. Financial terms were not disclosed.

- The Riverside Company acquired a majority stake in Essential Compositions, a Gandía, Spain-based fragrances company. Financial terms were not disclosed.

EXITS

- Frontdoor acquired 2-10 Home Buyers Warranty, an Aurora, Colo.-based home warranty provider, from Genstar Capital. Financial terms were not disclosed.

OTHER

- Bensussen Deutsch & Associates acquired SwagUp, a Piscataway, N.J.-based promotional products and software company. Financial terms were not disclosed.

- Coincheck Group, an Amsterdam-based holding company of a cryptocurrency trading service, merged with Thunder Bridge Capital Partners IV, a Great Falls, Va.-based special purpose acquisition company. Financial terms were not disclosed.

- Growers Edge acquired AQUAOSO Technologies, which offers its services under Agcor, a Denver-based mapping, data, and analytics software provider for agricultural lenders. Financial terms were not disclosed.

- TOPPAN Holdings agreed to acquire the thermoformed and flexibles packaging business of Sonoco, a Hartsville, S.C.-based sustainable packaging company, for approximately $1.8 billion, cash-free and debt-free.

AWS CEO Matt Garman on startups, nuclear power, and soaring AI compute costs