Tech

Can companies be good partners for startups and VCs?


Cloudflare last week announced a $1.25 billion funding program for startups building on its software, Cloudflare worker. But this is not a corporate venture fund and the money is not corporate money.

Instead, it’s an initiative in which the cloud infrastructure company manages a pool of its startup clients and introduces them to venture capitalists, each of whom commits $50 million support for companies building on Cloudflare workers. The list of 26 venture funds includes large companies like NEA and Boldstart and smaller ones like Pear VC. Cloudflare CEO Matthew Prince told me the numbers have continued to rise since the project was announced in September.

The interesting reason is that while public companies have been significantly increasing their presence in startup funding in recent years, largely through one of two books: Companies or Dedication a capital on their balance sheet to support startups in complementary areas or fields of their own, or they are 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 transfer funds to its customers, thus securing their need for the platform, while also attracting startups to consider building on Cloudflare versus other platforms – without Cloudflare doesn’t cost anything. It is worth noting that companies participating in this program, regardless of whether they are introduced to VCs or not, receive many free software features for a year.

But is a corporation like Cloudflare 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.

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