When the figures for Q3 showed venture capital funding for open source software-related vendors declined 38% in the third quarter I all-but abandoned my prediction that venture funding in 2010 would match the levels seen in 2009.
At that stage it looked like we would have to see a rapid increase in funding in the fourth quarter to get anything near the $394m raised in 2009. That is precisely what transpired, however.
According to preliminary figures collated by The 451 Group, $151.9m was invested in open source software-related vendors in Q4, a 74% increase on the $87.3m raised in the fourth quarter of 2009.
In fact, the fourth quarter of 2010 was the largest single quarter for investment in open-source-related vendors since the second quarter of 2008, and the fifth largest quarter ever.
There were 16 deals in the quarter and 14 with a disclosed deal size, resulting in an average deal size of $10.8m in 4Q10. That compared with 19 deals in the quarter and 18 with a disclosed deal size, resulting in an average deal size of just $4.9m in 4Q09.
For the year as a whole private investment for open source software-related vendors grew 18% to $466m in 2010 – the third largest annual total ever – following a 37% decline to $394m in 2009.
The fourth quarter total also means that total private investment in open-source-related vendors has surpassed $4bn since 1997 – from 543 deals and 216 different vendors.
451 Group clients can read our full assessment of venture funding for open source software-related vendors in 2010, including details of the investment pipeline, and an explanation as to why we are predicting funding to be in the region of $500m in 2011. Non-clients can apply for trial access using the same link.