NB The figures originally reported here were preliminary and have been revised for a formal CAOS report to be published in the first half of 2009. The figures for Q4 have been removed or updated, while those for the full year have been updated:

The figures for publicly disclosed venture capital funding in open source vendors during Q4 and FY08 are in and while the numbers themselves provide a mixed picture, the statistics don’t necessarily tell the full story.

• Overall $587.3m was announced in 2008, up 45.4% on 2007, and the second highest annual figure on record after 2006.
• Most of the funding ($370.6m) was announced in the first half of the year as 2008 set new records for the most funds announced in both the first ($209.8m) and second ($160.8m) quarters.
• Meanwhile funding levels dropped sharply in the second half to $216.7m, although that was up on $194.7m announced in the second half of 2007.

There are a couple of reasons why these stats don’t tell the full story, however.

• There were three deals announced with an undisclosed deal value in 4Q08, compared to just one in 4Q07. Those deals involved DotNetNuke, Siruna and DimDim.
• There were other deals that were done, but not officially announced, such as Cloudera’s. It is our policy to only include deals that are officially announced or reported by trusted sources.

Of course the big question is about what will happen to VC funding in 2009. I’m certainly not as confident as I was a year ago when I predicted that VC funding would rise in 2008.

The fourth quarter showed that despite a slow down there is money out there if the fundamentals are right, and it was good to see new vendors emerge around technologies such as Hadoop and Lucene.

No doubt there will be open source failures during 2009 given the economic conditions, and I have written before about the potential for increased M&A, but I think we will continue to see new start ups get funding and while VCs will drive a hard bargain for later stage deals there will still be money available for vendors with good prospects.

Given that I expect to see an increased number of smaller deals overall I’d suggest VC funding in 2009 will be down compared to 2008, and probably compared to 2007 as well, but the interest of VCs in commercial open source will continue.