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The new fund will focus on early-stage investments in technology and health care, and brings NEA’s total committed capital to nearly $24 billion. 

 NEA has invested in high-profile companies like ,   and . Most recently, it invested in ’s $22 million and ’ $105 million , both announced last week, according to Crunchbase.

Along with the new fund, the firm announced it named Liza Landsman as a general partner. Landsman joined NEA as a venture partner in 2018 after her time as president of Jet.com, an NEA portfolio company.

“We are deeply grateful to our limited partners for their commitment to NEA and their confidence in our ability to execute on the tremendous opportunity ahead,” NEA managing general partner Scott Sandell said in a statement. “As technology transforms every industry globally and life sciences innovation continues to accelerate, NEA is in a great position to continue doing what we do best—work alongside entrepreneurs to build great companies that will shape the future of how we live, work and play.”

NEA, which was founded in 1977, says it has had more than 230 of its portfolio companies go public and has been involved in more than 390 mergers and acquisitions.

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But those developments are not reflected in funding numbers for the just-ended quarter. Crunchbase data shows that investment in U.S. and Canadian startups was still rolling along at historically high levels in Q3.

Overall, investors put $36.16 billion to work across all stages in the third quarter, according to projected totals for North American startups. That’s up a bit from Q2 and a median performance relative to the past five quarters.

Deal counts were up, too. In the just-ended quarter, Crunchbase projects that investors backed a total of 3,563 funding rounds, the highest tally in five quarters, by a smidgen. A pickup in deal-making at the angel and seed stage boosted the Q3 totals.

It was also a strong quarter for exits, albeit with several instances of some weak aftermarket IPO performance. More than 20 private, venture-backed companies carried out public offerings (our running list of 2019 IPOs is here). M&A was also not bad, with a number of deals .

Below, we chart and analyze the numbers in more detail, focusing on investment totals, deal counts, stage-by-stage dealmaking, and exits.

Total Funding And Round Counts

First, we’ll look at funding totals for the quarter. The chart below tallies up investment across all stages, from seed through technology growth.

As you can see, no slowdown here, at least looking at the overall numbers. The chart does show a decline in early stage investment, which could be a worrisome sign. More on that as we look at stage-by-stage trends.

Next, let’s take a peek at round counts in the chart below:

The broad takeaway here is that round count totals were comparatively high in Q3, with a rise in seed-stage financings compensating for a dip in early-stage dealmaking. Now, let’s take a closer look at what’s happening at each stage.

Seed

It all starts at seed stage, so we’ll begin here. The big picture: Seed deals got bigger on average from year-ago levels, and there were more of them.

Investors put $1.92 billion into seed-stage deals in Q3, per Crunchbase projections. That’s up sharply from Q2 and the highest total in five quarters. Projected seed funding deal counts were up as well in Q3, with the total expected to slightly exceed 2,200.

One of the factors behind the rise in seed funding totals is an increase in what Crunchbase calls “supergiant seed rounds,” or seed deals of $5 million or more. Rounds of this size used to be a rarity, but have become much more common in the past couple of years.

Early Stage

Early-stage dealmaking (Series A and B) was less robust in Q3 compared to other recent quarters.

Overall, startups raised $11.5 billion in early-stage funding in Q3. That’s about on par with year-ago levels, but represents a drop of 14 percent from Q2 totals.

Round counts, meanwhile, showed deeper contraction. A total of 1,045 companies are projected to close a Series A or B round in Q3—the lowest level in five quarters. In all, third quarter round counts are down around 12 percent from Q2 and year-ago levels.

In the charts below, we look at both round counts and investment totals for early-stage over the past five quarters:

At the moment, it’s unclear what drove the decline in early-stage investment and deal counts. There’s a lot of money sloshing around the venture space, so it’s likely not about capital shortages and more about investors not finding as many candidates that they wanted to back.

That said, there were plenty of really large early-stage rounds in Q3, for companies in a broad range of industries. We list a few of the largest below:

Late Stage

While we saw some faltering in early-stage funding in Q3, late-stage held strong.

North American companies raised $20.9 billion in late stage rounds (Series C and beyond) over the course of the quarter. That’s a rise of 14 percent from Q2 and up 11 percent from the same period last year.

Round counts totaled 282 – about average for the past five quarters, with median round size flat.

A few really large later-stage rounds played a big role in boosting the quarterly totals. Below, we look at some of the largest Q3 funding recipients in North America:

Technology Growth

Technology growth is the most volatile category Crunchbase tracks, as there are few deals at this stage and they occasionally are huge enough that a single deal moves the quarterly totals.

For Q3, tech growth deals brought in $1.83 billion across 24 rounds.

IPOs

So, enough about money going into startups. What about companies actually providing some returns?

Turns out, the third quarter was a pretty good one in terms of venture-backed tech and healthcare companies making it to market. At least 21 such companies carried out IPOs in Q3 ().

Aftermarket performance, however, was more up-and-down, with some high-buzz companies seeing share prices fall sharply following their debuts, while others held on to gains.

Software unicorns, including and , confirmed there’s still plenty of demand from public investors for high-growth software plays. Disappointing debuts by high-end fitness startup and teeth-straightening provider indicated investors have less appetite for sustaining sky-high valuations in other sectors.

In the chart below, we look at five of the largest venture-backed IPOs of the quarter, based on capital raised.

M&A

Now, onto M&A. While acquisitions don’t provide as much buzz as a blockbuster IPO, they do account for a majority of startup exits.

Since many acquisitions are of undisclosed size, it’s difficult to gauge the returns they’re generating. However, we can look at the handful of large M&A deals for the quarters as at least a partial indicator of what acquirers are willing to pay a lot to buy.

With that in mind, the chart below looks at five of the largest disclosed-price M&A deals of the quarter involving venture-backed tech and biotech companies:

The Big Picture

The Q3 numbers, overall, point to a pretty strong funding environment. However, there is reason for greater concern than the numbers might seem to warrant.

That’s because a lot of warning signs for the startup and unicorn space cropped up towards the end of the quarter. These include the WeWork IPO drama, disappointing Peloton and SmileDirectClub debuts, and a growing sentiment that private investors may have overshot in valuations assigned to high-growth companies outside the software space.

As 2019 enters its final quarter, the exuberance that defined the unicorn space for most of the year is leveling down some. We’re not saying the party’s over, but it might be winding down a bit.

Methodology

The data contained in this report comes directly from Crunchbase, and in two varieties: projected data and reported data.

Crunchbase uses projections for global and U.S. trend analysis. Projections are based on historical patterns in late reporting, which are most pronounced at the earliest stages of venture activity. Using projected data helps prevent undercounting or reporting skewed trends that only correct over time. All projected values are noted accordingly.

Certain metrics, like mean and median reported round sizes, were generated using only reported data. Unlike with projected data, Crunchbase calculates these kinds of metrics based only on the data it currently has. Just like with projected data, reported data will be properly indicated.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to US dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs, and other financial events as reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of Funding Terms

• Seed/Angel include financings that are classified as a seed or angel, including accelerator fundings and equity crowdfunding below $5 million.
• Early stage venture include financings that are classified as a Series A or B, venture rounds without a designated series that are below $15M, and equity crowdfunding above $5 million.
• Late stage venture include financings that are classified as a Series C+ and venture rounds greater than $15M.
• Technology Growth include private equity investments with participation from venture investors.

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Of course, that’s wishful thinking. Like it or not, San Francisco is the de facto tech startup and unicorn capitol of the Western Hemisphere. And yes, it’s really expensive.

Venture funding data indicates things are likely to stay that way. While there are a few startups that ditch the high rents for hip and comparatively affordable places like Austin, the notion of a mass exodus of tech talent isn’t borne out by the numbers.

The numerical reality is that tech startup financing continues to flood into San Francisco, and the city’s share of total investment is in fact, rising.

I Left My Term Sheet In San Francisco

So far this year, San Francisco-based companies have raised roughly 45 percent of all seed through pre-IPO funding for California companies tracked in the Crunchbase database. That’s up from just under 40 percent in 2018. In the chart below we look at how the percentages have altered over time:

It’s a pattern that’s been accelerating for a while. In the chart below, we look at funding in dollar terms for San Francisco-based companies and those based in any other city or town in California.

The general trendline is pretty clear. San Francisco has become a venture capital vacuum cleaner, sucking up cash even faster than its growing stable of unicorns can spend it.

It’s not just a late-stage thing either. Of course the city has plenty of high-valuation startups raising supergiant funding rounds. Even a list of got rather long, topped by gargantuan rounds for logistics platform and delivery unicorn .

But early stage and seed are active as well. For 2019, San Francisco’s stage-by-stage breakdown is as follows:1

• Late stage: 115 deals, collectively valued at $10.1 billion
• Early stage: 268 deals collectively valued at $5.14 billion
• Seed: 423 deals valued at $403 million

Average round size for San Francisco’s seed deals and early stage deals are also roughly in line with the rest of the state. It’s at the unicorn stage where we see the city’s share of supergiant financings tick up. There are at least 57 private, venture-backed companies with reported valuations of $1 billion or more that are based in San Francisco. And that tally doesn’t include the sizable list of local unicorns – Uber, Lyft, Slack, Pinterest, Cloudflare, etc. – that went public this year.

The chart below looks at round counts for San Francisco as a percentage of statewide totals.

And here, we look at how total round counts compare:

Is San Francisco’s Dominance A Good Or Bad Thing?

So, is it a good thing that a city of 47 square miles surrounded on three sides by water continues to slurp up so much of California’s venture capital commitment?

We reached out to Jeff Bellisario, interim executive director for the , which studies economic issues affecting the region’s livability and business competitiveness. His view is it’s not the rise of startups and unicorns that’s the problem — it’s the region’s failure to keep pace with this growth through investments in housing, transportation, and other infrastructure.

“We see the tech industry as our advantage. It is one of the reasons why our growth has been stronger than almost everywhere else in GDP and employment,” he said. Trouble is, municipalities and developers move slower than the scale-fast-and-break-things crowd, and the region has underinvested in infrastructure for decades.

It’s a sunnier view than some others take. A popular Washington Post feature story titled declares: “You no longer leave your heart in San Francisco. The city breaks it.” Its litany of locals’ woes includes pricey real estate, income inequality, $20 salads, the homeless, adult children unable to move out, non-tech workers unable to move in, and the relentless onslaught of “hyper-gentrification.”

Wherever you stand on the pros and cons of the techification of San Francisco, data indicates it’s not stopping. The current wave of startup investment, scaling and exiting continues to build. If dollars do leave the city, Bellisario predicts it’s likely they won’t go far. He sees potential for other regional cities, Oakland in particular, to absorb some of the overflow of startup-saturated San Francisco.

We’ll have more on that trend next week. But first, it’s time for a $20 salad break.

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Let’s dive in and see where they’re at.

Most recently, Datadog and Ping went public this week. Pricing above and at the midpoint of their respective ranges, they both saw their stocks surge on their first day of trading.

New York-based Datadog started trading on the public markets on Thursday after setting its price at $27 per share on Wednesday. The company’s stock opened at $40.35, nearly 50 percent higher than the price it set. Datadog’s stock closed at $37.55 on its first day of trading.

Denver’s Ping Identity closed its first day of trading Thursday at $20.11 after pricing on Wednesday at $15 per share. Its stock opened at $18.75, 25 percent higher than where it priced.

At first blush, this is the ideal outcome for tech companies and their private market counterparts. The public market has, at least for now, proven to have an exceptional appetite for companies that are growing fast. Yet the significant pops over also signal that quite a bit of money has been left on the table. But the alternative, which is pricing too high, certainly comes with a touch more embarrassment, as SmileDirectClub has found out.

The Nashville-based DIY teeth straightening company priced its shares at $23 apiece before it started trading publicly last week. Its stock closed 28 percent below its price on its first day of trading and still hasn’t hit the $23 per share price the company thought it was worth. SmileDirectClub’s stock closed at $18.64 per share on Thursday.

Cloudflare’s had a pretty good near-week on the public markets so far. The company priced its shares at $15 apiece and opened at $18 per share on its first day of trading last week. Cloudflare’s stock was trading at $18.75 at the close of markets on Thursday.

We’ll continue to track late-stage companies’ IPOs as they come (Peloton next week!)

Illustration Credit:

After a fascinating public debut through a direct listing, share price has given up ground. It’s a topic that we explored last week, outlining a few different options regarding why Slack has drifted south as a public stock. ( from , noting that the company, lacking a lock-up period, could have a different post-IPO trading pattern than we’re accustomed to.)

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Best among our three guesses was the idea that Slack was possibly overvalued by the market at first, and that its declines from as high as $42 per share to the $26 range were merely foam coming off the latte.

I think that’s more correct than I imagined at the time (bear in mind that Griffith’s argument could hold true concurrently). I couldn’t put the idea down so I did a little research today to provide a visual look at the difference between how Slack is still valued after its declines and the relative revenue multiples of a few other SaaS companies.

My goal was to generate a striated look at the various price/sales multiples of firms that I knew so that I could better understand where Slack slotted in. Behold:

There are four groupings on this chart. The bottom two squiggles form the first. The red and orange lines represent the revenue multiples endured by and , two leading firms in the early unicorn era. As you can see, the market is not super stoked about their growth profiles; if it was, they would trade for higher multiples.

The green line is , a firm that has seen massive value accretion as a public firm, but as you can see has coupled that valuation to strong revenue growth. That Twilio’s revenue multiple is curving down in its middle-age is not surprising.

The little purple line is , a brand new IPO that priced above its raised range and opened sharply higher. Look at its lovely, trailing revenue multiple!

And then there’s Slack, up top. As you can see, it’s valued sharply higher on a price/sales basis than even Cloudflare. Despite losing quite a lot of altitude, the public market is still valuing Slack far above even the richly-priced new offering. This means that far from Slack losing its shine as a public company, it’s now merely being treated as better than its peers. That’s a change from before when, according to its historical revenue multiple, it was treated like a god.

Why Is Slack Being Treated So Well?

A good question is why Slack is not only valued more richly than its peers today but more richly than they have ever traded? A few reasons.

It’s at nearly 60 percent at scale (greater than nine-figure quarterly revenue), which is impressive. Its non-GAAP gross margin (we prefer this metric for now as the company’s unadjusted gross margin is impacted by some one-time costs) is around 87 percent. That means that the firm is accreting incredibly valuable recurring revenue.

Continuing, the firm’s “net dollar retention rate” of 136 percent is insane; the firm’s extant customers buy lots more of its product over time, generating a natural growth rate that is enviable. And Slack’s enterprise penetration (measured by looking at its number of customers with greater than $100,000 in recurring spend) is expanding more quickly than its aggregate revenue growth rate. That implies that large accounts are growing as a percent of Slack’s top line despite the Microsoft threat.

All that and the company generates cash from operations, implying it won’t need to raise money from the public markets, limiting future dilution. Investors love that sort of thing. Toss in its big brand and user love, and Slack is a super solid SaaS firm.

Therefore cry not for Slack. Cry instead for the companies slugging it out there trying to sell storage to large companies.

Illustration: .

The company, which will begin trading on the New York Stock Exchange on Friday, first pitched its IPO between $10 and $12 per share, which it later increased to $12 to $14.

At $15 per share, the company raised $525 million in its debut. first reported the pricing.

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The figure outstrips the company’s prior known fundraising. Cloudflare raised as a private company, with its most recent round . The company last had a private valuation of $3.25 billion.

The San Francisco-based company’s debut on the public markets–it’s listing under the ticker symbol “NET”–comes on the heels of some potentially troubling revelations by the company. Cloudflare said in an updated filing on Wednesday that it “may have failed to comply with certain U.S. export-related filing and reporting requirements and may have submitted incorrect information to the U.S. government in connection with certain hardware exports.”

“We identified that our products were used by, or for the benefit of, certain individuals and entities included in OFAC’s Specially Designated Nationals and Blocked Persons List (the SDN List), including entities identified in OFAC’s counter-terrorism and counter-narcotics trafficking sanctions programs, or affiliated with governments currently subject to comprehensive U.S. sanctions,” the company wrote in the filing.

The news of the disclosure was first reported by the on Tuesday, but the company was still able to price above its target range. We’ll see how other investors feel about the company and its new valuation when it starts trading tomorrow.

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, a California-based digital content delivery and Internet security company, raised its IPO price range this morning from a prior $10 to $12 interval to $12 to $14 per share.

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The unicorn did not adjust the number of shares it expects to sell in its public debut. At its new prices, Cloudflare would be valued between $3.5 billion and $4.1 billion. (Cloudflare’s value reaches a maximum of $4.18 billion when shares reserved for underwriters are included in the calculation.) Each price is comfortably higher than Cloudflare’s final private valuation of $3.25 billion set in March of this year .

The market expects the company to price Thursday after the bell and trade Friday morning. Cloudflare’s maximum IPO raise is now $563.5 million, calculated using $14 per share and counting shares reserved for underwriters in the calculation.

We anticipated the new, higher prices. When the company initially set an IPO price range, we offered to “wager $1” that we see another SEC filing form the company with a “new price range.” Why? Because the company’s IPO price felt light in comparison to its private valuation given that the company disclosed accelerating revenue growth and falling cash consumption. Investors covet both, especially at a company operating at scale (in excess of nine-figures of annual revenue.)

Now, however, the game becomes more complicated. Where will Cloudflare finally price? Despite what’s going on in WeWork-land, I wonder if there isn’t a smidge more upside in the tank for the popular CDN vendor. More precisely, will Cloudflare price its equity at a price over the top of its new range? At $15 per share, for example. I wouldn’t be surprised.

It’s something we’ve seen twice this year, recall. priced above range in June and priced above range in August. Both cases show that for companies with traditional economics (ahem, WeWork), there is public-market appetite for IPO shares. Perhaps Cloudflare will catch the same wave.

Looking ahead should price this afternoon, and and are in the wings.

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Selling an expected 35 million shares in its IPO, Cloudflare could raise as much as $420 million in the share sale. Add in the 5.25 million shares reserved for its underwriting banks, and the company could gross $483 million at $12 per share, the top of its range.

According to its new S-1/A filing, Cloudflare anticipates having around 293 million shares outstanding when it goes public, valuing the firm between a little over $2.9 billion, and $3.5 billion. Given that the firm was last valued at $3.25 billion while private, it’s quite possible that the firm is hoping to raise its price range, giving it a higher valuation, and one larger than what afforded it.

Cloudflare has , including capital from , , Ventures, and . Early investors include and .

Financial Context

Cloudflare generated $129.2 million in revenue during the first half of calendar 2019. That figure resulted in a gross profit of $100.0 million, giving the firm gross margins of 77.4 percent in the period. That’s perfectly fine for a software-style business, even if we have seen the occasional higher figure from companies like .

In the first half of 2019, Cloudflare posted revenue growth of 48.3 percent, along with a slightly higher net loss in dollar terms. The company’s net loss in percent-of-revenue terms fell from 37.3 percent in the first half of 2018 to 28.5 percent in the first half of 2019. Both figures, however, represent deteriorations from prior results, most especially the company’s 2017 results. In that year, Cloudflare grew revenue from $84.8 million to $134.9 million while losing just $10.8 million on a net basis.

What’s driving the rise in losses measured in dollar, and not percent-of-revenue terms at Cloudflare? One answer is rising sales and marketing costs. In the first half of 2019, Cloudflare’s sales and marketing line item rose to 52 percent of revenue, the highest result listed including data going back to 2016. The company notes that sales and marketing headcount saw a “57 [percent] increase” from the first half of 2018 to the first half of 2019, for example.

But as we noted in our first coverage of the company’s results, accelerating revenue growth and falling operating cash burn are an attractive pair.

The above figures are largely what we already knew, but better framed today in the context of the firm’s prior, private valuation ($3.25 billion) and its new IPO price range ($2.9 billion to $3.5 billion). Has the firm generated material value gains since that Q1 2019 private market price; and if so, how much?

If I was a gambling man, I’d wager $1 that we’ll see another S-1/A from Cloudflare with a new price range.

Illustration: .

Ask someone who follows tech startups and other high-growth private companies what they think about today’s IPO market and they’d probably say it’s healthy. And they would be partly correct.

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But underneath the glitz of recent debuts there is a complete dearth of IPOs close enough to a debut on a US exchange to have an expected trading date.

Indeed, a quick peek shows that Nasdaq’s is barren. The NYSE is . Even has nil coming up.

That leaves us with just a few huge offerings to look forward to. But what about the rest of the unicorns?

Private Herd

While the impending IPOs of (more here), (more here on WeWork), and (more here) will generate big news, they represent the higher-echelons of unicorns. According to , Cloudflare is worth around $3 billion; SmileDirectClub is worth about the same; and The We Company is currently marked for sale at $47 billion.

The three IPOs will make liquid a huge slice of wealth that has been locked up for some time. But the Unicorn Leaderboard lists hundreds and hundreds of companies. Knocking three off the list won’t even get a full percent of the companies exited. And I’d guess that the market is still birthing unicorns far faster than it is finding exits for them.

The backlog of unicorns that need an exit is, therefore, getting longer, not shorter. The current IPO dearth is an easily spotted facet of the problem, helpful in illustrating what . This has been an issue for some time.

If Not Now

A question I keep asking myself as I watch unicorns continue to not go public is whether they are too immature to do so (some, certainly), or if the companies in question are simply happier staying private as they have continued access to capital (some, certainly). It’s hard to tell which category is more popular from a distance, however.

Many companies are taking a risk by not eating their lumps and going public in the current window. Cloud valuations are still high, IPOs are performing well, and public investors still value growth over profit. Those conditions do not have to hold, even if markets stay highly valued in aggregate.

Waiting is a gamble that unicorns are taking by not going public. I do not understand it, but that’s probably why I’m a reporter and not a founder.1

Illustration: .

These disclosures, made to regulators and the investing public, are a key step companies have to take in order to raise capital from the general public and have their shares openly trade on an exchange. S-1 filings contain all sorts of information related to a company and its business, but no data points are more important—from an investment perspective—than the company’s financials.

Cloudflare In Focus

Here are some of the company’s headline numbers: In the first six months of 2019, Cloudflare generated $129.15 million in revenue at a gross margin of roughly 77.4 percent. Revenue has grown in a linear fashion for a couple of years, with the company maintaining comfortably high margins on its services over time. This being said, the growing company continued to pour money into sales & marketing, and research & development, leading to an operating loss of $36.92 million and a net loss of $36.82 million. The latter of which works out to a fully-diluted loss of 43 cents per share.

In the chart below, we plot reported quarterly financials from page 98 of Cloudflare’s S-1 registration.

The company says its revenues have grown by 247 percent between Q1 2016 and the end of Q2 2019, while its cost of revenue only increased 146 percent over that same period.

Customers & The Cost Of Serving Them

Cloudflare reported having 74,873 paying customers as of June 30, 2019, up 33 percent from the same time in 2018. Cloudflare has focused on acquiring and servicing high-value customers; as of June 30th, the company reports having 408 large enterprise customers which pay the company $100,000 or more per year. That’s up 70 percent from the same time in 2018.

As Cloudflare grows the scale of its business, the cost of providing services to additional customers goes up. However, the company has managed to grow its revenues faster than the cost of providing those services. In a letter to prospective shareholders included in today’s filing, Cloudflare co-founders and state that “efficiency is in [the company’s] DNA.” While the cost of providing its services hasn’t gone up that quickly, the money Cloudflare commits to growing its business has.

That old adage, “you have to spend money to make money,” holds true here. Cloudflare hasn’t been shy about spending to grow the scope and scale of its business. Cloudflare’s research and development expenses grew by 50 percent, from $24.3 million in the first six months of 2018 to $36.5 million in Q1 and Q2 2019, largely driven by a 45 percent increase in headcount in its research organization, according to the filing.

Cloudflare’s sales and marketing expenses grew by a similarly large margin. The company spent roughly $66.7 million in the first half of 2019, up 60 percent from the same period of time last year. Cloudflare grew headcount in its sales and marketing organization by 57 percent, compared to last year. The company’s general and administrative expenses, some $33.7 million through Q2 2019, is mostly unchanged.

Cloudflare reports having $42.4 million in cash and cash equivalents on hand through June 30, 2019, which includes $2.9 million held by its foreign subsidiaries. Cloudflare also holds approximately $82.3 million in marketable securities, including U.S. treasuries, commercial paper, and corporate bonds.

The company reports having an accumulated deficit of $232.7 million and says that it “expect[s] to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the investments we intend to make in our business.”

Cloudflare’s business is growing at a steady clip. Though it’s likely to keep losing money for the near-term future, it seems well-positioned for long-term success. If nothing else, as the world becomes more inter-networked and digital malefactors grow bolder in their attack strategies, demand for services like those Cloudflare provides is likely to grow as well. Whether Cloudflare can continue to capitalize on that business opportunity is a different story altogether. However, for every cloud service, there’s a silver lining.