Cloudflare last week announced a $1.25 billion funding program for startups that build on its software, Cloudflare Workers. But this isn’t a corporate venture fund and that sum is not company money.
Rather, it’s an initiative in which the cloud infrastructure company curates a group of its startup customers and presents them to venture capitalists, each of which committed $50 million to back 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 that number has continued to grow since the project was announced in September.
The reason this is interesting is that while public companies have been drastically increasing their presence in startup funding in recent years, it’s largely been through one of two playbooks: Companies were either setting aside a sleeve of capital on their balance sheet to back startups in adjacent or complementary sectors to their own, or they were launching an accelerator program.
This strategy from Cloudflare feels fresh. And if successful, it could prove to be a pretty smart bet. The program essentially helps funnel money to its customers, thus securing their need for the platform, while also attracting startups to consider building on Cloudflare over other platforms — without Cloudflare having to spend anything. It’s worth noting companies entering this program, regardless of whether they get pitched to VCs, do get multiple software features for a year for free.
But will a corporation like Cloudflare be a good matchmaker? Prince seems to think so — he told me that the idea for the program came from the company’s conversations with venture capitalists.