Web Security Company CloudFlare Files to Go Public, Listing Some Interesting Risk Factors: Term Sheet

Another day, another unicorn files to go public. 

This time, it’s CloudFlare, the San Francisco-based web performance and security company. The company did not disclose the number of shares that would be offered and set a placeholder target of raising $100 million.

CloudFlare has raised more than $332 million in total venture capital funding since its inception. Its largest outside backers include Fidelity, Venrock, NEA, and Pelion Ventures. The company was last valued at $3.2 billion in the private markets.

In the first half of 2019, Cloudflare had a $36.8 million net loss on $129.2 million in revenue, according to its S-1 filing. That revenue figure was up 48% from the first half of 2018, and the loss was up 13%.

Earlier this month, CloudFlare received negative publicity in connection with the use of its services by 8chan, a forum website that served as inspiration for the recent attacks in El Paso, Texas and Christchurch, New Zealand. Even though CloudFlare severed its ties to 8chan last week, it went on to list it as a risk factor in its prospectus. 

Activities of such groups have had “significant adverse political, business, and reputational consequences” for the company, Cloudflare said in the filing. Terminating those accounts, though, has raised censorship concerns, it said.

“We received significant adverse feedback for these decisions from those concerned about our ability to pass judgment on our customers and the users of our platform, or to censor them by limiting their access to our products, and we are aware of potential customers who decided not to subscribe to our products because of this,” the filing reads.

My colleague Verne Kopytoff reports:

Cloudflare co-founder and Chief Executive Officer Matthew Prince has publicly struggled with decisions balancing freedom of speech on the internet with the need to limit hateful, racist online posts and potentially dangerous calls for violence.

After deciding to cut services to The Daily Stormer, Prince…

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