VC funding for open source – existential question time

I tweeted last week that VC funding for open source related vendors was up 95% in Q3, driving by significant investment in ‘big data’ related vendors.

In calculating that percentage I had overlooked an important deal, however: one that re-writes the record books and raises existential questions about investment in ‘open source related vendors’.

There has always been a question mark over the term ‘open source vendor’. That is why I started using the term ‘open source-related vendors’ as more accurate term to describe the collective group of vendors that we see depending on open source software to drive revenue.

In particular, ‘open source-related vendors’ reflects the fact that many vendors are dependent on open source software to build their products and services, even though those products and services may not themselves be open source.

One such vendor is Opera Solutions, http://operasolutions.com/ which has based its data analytics platform on a number of open source components including Talend,. Kettle, memcached and Apache Hadoop. Opera’s software is not itself open source, however, which led by to initially omit the company’s series A funding round from my calculations for Q3.

How significant an omission was this? Pretty significant, given that Opera raised no less than $84m. Include that deal, and funding for open source-related vendors increased not by 95% to $159.2m, but by 197% to $243.2m, which is the largest single quarter for funding for open source-related vendors ever.

We have previously included funding rounds for vendors that depend on open source software despite producing closed software – Karmasphere, which raised $6m in Q3 is another – but it is the size of Opera’s funding round that highlights the existential problem in defining a vendor as ‘open source related’.

Whereas it was previously pretty easy to identify open source-related vendors, as we see more and more closed source vendors and service providers building on open source foundations, it becomes increasingly clear that the bounds of ‘open source-related’ are almost limitless.

It is not so much a matter of when do you start counting, but when do you stop.

Tags: , , , , , , , , , , , , , , , , ,

4 comments ↓

#1 Henrik Ingo on 10.03.11 at 4:32 pm

You make an excellent point. Also, I love existentialism!

Today open source is everywhere, so very soon this question will not make sense anymore. (You can still argue about what makes a “pure” open source vendor, but everyone will be open source *related*) They are not startups, but would you agree that Oracle, Microsoft, Google, Facebook and Twitter are all “open source related”?

henrik

#2 Matthew Aslett on 10.03.11 at 6:10 pm

Yes, I would. Hence the existential dilemma.

#3 451 CAOS Theory » VC funding for OSS hits new high. Or does it? on 12.16.11 at 11:42 am

[…] with Q3, however, the list of vendors presents us with something of an existential dilemma, as we see an increasing amount of activity by what we have referred to as ‘complementary […]

#4 VC funding for OSS hits new high. Or does it? | Tastala WP0 on 12.17.11 at 8:38 am

[…] with Q3, however, the list of vendors presents us with something of an existential dilemma, as we see an increasing amount of activity by what we have referred to as ‘complementary […]

Leave a Comment