CloudFlare Pulls In $110 Million, Plots Next Move

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CloudFlare isn't exactly a household name, and that's probably ok. CloudFlare sees itself as a background service, one that most Internet users never need to know anything about.

On the other hand, it just received $110 million in funding from five companies that are household names: Fidelity Investments, Google Capital, Microsoft, Qualcomm Ventures, and Baidu (the big Chinese search engine company). Its CEO, Matthew Prince, said earlier this year that it's on a trajectory to go public in 2017, and when it does so, it's expected to have a valuation equivalent to Salesforce when it went public -- $1 billion.

"There's not a rush to go public. But we are definitely on a trajectory that’s inevitable," Prince told the Bloomberg news service in an interview in March.

CloudFlare's Joshua Motta, director of special projects, explained in a Sept. 22 blog post that the six-year-old company will use the $110 million in venture capital to more rapidly expand its content delivery system, which combines high-speed downloads to mobile devices with an ability to thwart various bots, malware, and denial of service attacks. The combination of intelligently routed, optimized content delivery and advanced security features has made CloudFlare a youthful Internet giant.

CloudFlare was an embryonic giant at its December 2012 round of fundraising, when it consisted of 37 employees and served 85 billion pages a month for 500,000 site owners. Today it's serving one trillion pages a month for 4 million Web properties. Two of its largest customers are Goldman Sachs and Bank of America.

With the added funding, "in 2016 alone we will more than double our global presence, increase the size of our network by an order of magnitude, and with that allow millions of new businesses and online publishers to accelerate and secure their online applications," claimed Motta in the blog post.

In order to use CloudFlare's services, its customers must change their website DNS setting to one that routes traffic through a CloudFlare data center, where the customer's website traffic is inspected and routed to an appropriate content server. CloudFlare inspects browser calls to see whether they carry malware and can analyze the log files of customers' Web servers to spot repetitive activity that signals the presence of a denial of service attack. If it spots such an attack, it can shield the attacked servers and choke it off.

CloudFlare's Rocket Loader loads a website's pages to a mobile device quickly by detecting the nature of the device and recasting the display to fit. Its Rail Gun uses compression to speed the connection between a CloudFlare data center and an Internet content server. It also has CloudFlare IPv6 Gateway, or a way for a website to be compatible with the IPv6 standard without requiring the site to be upgraded to IPv6.

[Cloud suppliers are getting into the content delivery network business. See Verizon to Buy Edgecast Content Delivery Network.]

It's a series of innovations that have been in step with the rapid expansion of the use of mobile devices for accessing websites and applications. The San Francisco firm won the Wall Street Journal's innovation award for Network and Internet technology in both 2011 and 2012.

CloudFlare's system is built on top of key open source components, including the Nginx high-concurrency event-driven Web server, the Redis NoSQL system, and the Apache Kafka message broker.

Cofounder Michelle Zatlyn told Elle magazine in June: "We're a company that runs behind the scenes. If we do our job right, people surfing the Internet don't even know we exist."

But the $110 million from Fidelity, Microsoft, Google, Qualcomm, and Baidu illustrates how a set of finance and technology giants know CloudFlare exists. Spent wisely, it may lead to the projected growth, the IPO, and a future where CloudFlare takes its place among the multi-billion dollar Internet giants.