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Cloudflare last week Cloudflare has announced a $1.25 billion funding program for startups building on its software Cloudflare Workers. But this is not a corporate venture fund and that sum is not company money.
Instead, it’s an initiative where the cloud infrastructure company has gathered a group of its startup customers and pitched it to venture capitalists, each of whom has backed $50 million for companies building on Cloudflare Workers. The list of 26 venture funds includes big players like NEA and Boldstart and smaller firms like Pear VC. Cloudflare CEO Matthew Prince told me the number has been growing since the project was announced in September.
The reason this is interesting is that public companies have been increasing their presence in startup funds significantly in recent years, but it’s one of two playbooks. Companies are putting capital sleeves on their balance sheets to support startups in the neighborhood. Or they were launching complementary sectors for themselves, or an acceleration program.
This Cloudflare strategy feels fresh. And if successful, it could be a pretty smart bet. The program essentially helps customers monetize, thereby maintaining their platform needs, as well as attracting startups to consider building on top of Cloudflare’s other platforms—at no cost to Cloudflare. It should be noted that companies entering this program will get access to many software features for a year even if they enter VCs.
But would a corporation like Cloudflare be a good matchmaker? Prince seemed to think so — he told me that the idea for the program came from discussions the company had with venture capitalists.
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