As the open source ‘market’ matures, we are seeing a greater number of funding and M&A (mergers & acquisitions) announcements. To help facilitate access to this type of information for our blog readers, I have added two new categories to this blog – Funding and M&A. The complete list of blog categories is available on the right column of this site. I have covered several items that relate to open source funding and M&A activity in recent 451 CAOS Links postings. I will post a summarization of these announcements today, and will plan to cover these types of announcements individually from this point forward.
Entries Tagged 'Funding' ↓
A representative of SpikeSource has confirmed that it has closed its Series B funding round, but the total is actually $24M US. No details on the participating investors were given, however. Normally, I would expect a press release to follow, but SpikeSource did not issue a press release for its $12M US Series A in May 2005. The company was incubated by Kleiner, Perkins, Caufield & Byers (KPCB) and the Series A funding round was co-led by KPCB and Fidelity Ventures. Also participating were Intel Capital and Omidyar Network.
Earlier this year, SpikeSource shifted from selling certified open source stacks aimed at the large enterprise market to selling ‘business-ready open source solutions’ to the small to medium enterprise market through its network of channel partners.
Update (08/19/06): The official response from SpikeSource is as follows…
SpikeSource confirms the closing of Series B Round funding for $24
million and that the following investors contributed to this round:
Kleiner Perkins Caufield and Byers, Fidelity Investments, Intel Capital,
CMEA Ventures and Duff Ackerman Goodrich. This follows the Series A
Round funding of $12 million in May 2005.
SpikeSource investments follow the growth of its solutions and channel
programs. Announcements in the coming months will provide further
details about other investors and the solutions and channel programs.
Zend Technologies, “The PHP Company”, announced today (press release) that it has raised an additional $20M U.S. in its Series D funding round. Stephen Shankland at c|net posted information about this last night, but I was waiting until the official announcement today to post a blog entry.
The latest funding round was led by Greylock Partners, as a new investor, with participation from the existing investors – Azure Capital Partners, Index Ventures, Intel Capital, Platinum Venture Capital, SAP Ventures and Walden Israel Venture Capital. A blog post from Om Malik (“In Zend (And PHP) We Invest“) lists the total Zend investment to date at $36.7M U.S.
What people aren’t mentioning in the coverage of this announcement is that Zend is a company without a CEO. This is the largest investment I’ve seen in an open source company without a CEO at the helm. The last press release from Zend mentioning (former) CEO Doron Gerstel is dated April 12th: “Zend Announces Zend Guard 4 – New version improves distribution and code protection for PHP applications“. Doron is now the President of Syneron, a non-surgical medical aesthetics equipment company – quite a change from what he was doing at Zend. Such is the nature of PR to praise the incoming management (I found out about this from a Syneron press release!), but to make no mention of departures (or the search). I am a bit surprised that Zend would announce the new round of funding without attaching it to a CEO announcement. It’s been over four months since Doron left.
Digium, which is the main commercial entity behind the Asterisk open source telephony platform, and brainchild of Mark Spencer, just received a nice pile of cash. The funding round, led by David Skok at Matrix partners, totals $13.8m. Matrix was also a backer of JBOSS.
Digium says it has experienced 100% growth in each of the last several years. Today Asterisk boasts over 1 million users (growing by over 1,000 downloads per day), and 130 Genuine Asterisk implementation partners worldwide. So, Matrix is not necessarily taking a big risk here as the product and concept have really taken hold in the past couple years..
We have been keeping an eye on Asterisk, and like what we see. The concept can not only aid in the cost effective rollout of individual call centers, but we also see a play here for hosted and other IP-based call center vendors co-opting the platform. For example, hosted contact center vendors can use the product to more easily scale their offerings as their products become more popular. The telephony sapce in general seems to be back on track, and we expect Asterisk to be a part of the development of the space in the next few years.
Over the past few weeks, there has been a significant amount of commercial activity relating to the open source database, PostgreSQL. EnterpriseDB raised $20 million US in its Series B funding round (press release), and signed a deal with Sun Microsystems to provide PostgreSQL support to Sun’s customers (article). GreenPlum and Sun announced a partnership for an open source data warehouse appliance powered by PostgreSQL (press release). While all of this new activity is taking place around PostgreSQL, Pervasive exited this market entirely (official posting).
Update 1 (08/08/06): EnterpriseDB has posted a press release regarding the support agreement with Sun.
Pentaho, an open source business intelligence software company, announced today that it has raised $8 million US in its Series B financing round, from New Enterprise Associates (NEA) and Index Ventures. It wasn’t too long ago that Pentaho announced its Series A financing round – in December 2005 (press release). That’s a total of $13 million US raised so far (at least).
Trolltech, an open source company focused on the cross-platform and mobile development tools space, had its initial public offering today on the Oslo Stock Exchange (OSE: TROLL) today. Shares were offered at 16 NOK (Norwegian Kroner), which is approximately $2.57 US, and closed on its first day slightly up at 17.50 NDK, approximately $2.81 US. You can check out the press release. The press release is in English, although my link to the Oslo Stock Exchange is in Norwegian. However, the numbers on the OSE page should be somewhat easy to discern. I don’t have a translation URL for you, as the ones I tried didn’t work very well.
While I’m on the topic of public open source companies, I should mention that Red Hat announced its quarterly earnings last week (press release). Shares have been down a bit since the earnings announcement as the results were below some analyst estimates. Also, the acquisition of JBoss had a greater impact on the dilution of their earnings than previously expected.
Watching Red Hat has always been interesting because it’s really the only public company with an entirely open source focused business model. I guess we can now add Trolltech to this list, although it’s not on the US markets. Other public companies have open source plays, but only as part of their overall business.
Matt Asay recently mentioned a research note from JMP Securities on his blog entry, “The Walking Dead“. One of the excerpts that Matt shared from the JMP Securities piece was a chart entitled “Open Source Revenues Relative to Valuation”, which looked at eleven public companies and the contribution that open source business contributed to overall revenues. However, only two of the companies listed had more than a single-digit percentage of their revenues derived from open source activities – Red Hat and VA Software.
Someday I hope to put together an “open source fund” tracking the various public open source companies and other public companies with a significant open source aspect to their business. The data in the JMP Securities graph could form the basis for an open source fund, whereby the calculation of the fund total followed the open source contribution to revenue as a percentage of the stock price per company. But, to do this right we need a few more IPOs (or major business shifts). I wonder who will go public next.
In mid-May, Hyperic announced that it has raised $2.5 million U.S. as part of its Series A funding round from Accel Partners. Less than a month later, the company announced that it would be pursuing an open source business model, releasing its Hyperic HQ monitoring product under an open source license. Hyperic was initially projecting a total of $3.2 million U.S. funding for the first round. Today, Hyperic announced that it has closed the first round with an additional investment from Benchmark Capital, bringing the total to $3.8 million U.S. Although board seats were not specifically mentioned in this release, I assume this means that Peter Fenton, General Partner from Benchmark Capital, will be joining the Hyperic board of directors.
Compiere, an open source ERP company, announced today that they have raised $6M U.S. from NEA (New Enterprise Associates) and are moving from Portland to Silicon Valley. I haven’t had the opportunity to talk with Jorg Janke, Compiere’s CEO, about this news yet. Jorg recently moved the company from Monroe, Connecticut, to Portland, Oregon, and I am bit surprised that he’s moving again – this time into the center of a highly-constrained recruiting market. Then again, NEA has an office on Sand Hill Road (in Menlo Park, CA), and with the venture money now, Jorg can afford to operate a company there!
It’s no secret that I like the geographically diverse nature of open source. There is nothing about open source that is particularly related to Silicon Valley – it’s a global phenomenon. The connection relates to the amount of technology venture capital and entrepreneurs in Silicon Valley, but there’s no reason why an open source company cannot be successful outside of California. We’ve already seen some great proofs of this. California is full of some very smart people, and it remains the center of the software business world, but it’s not the entirety of the software business world.
As I am in the process of moving to Portland, I am not too happy about Compiere’s decision to move, but that is entirely for personal reasons. The city is trying to position itself as an open source center, and it’s one of the reasons that I am moving there. Portland’s contribution to open source has mostly been with Linux – it’s the home of Linus Torvalds, the OSDL, and Linux innovation centers by Intel, IBM, and others. Losing a non-Linux company is a move in the wrong direction for a city that’s trying to build a robust, diverse, tech economy around “open” businesses.
Hyperic has announced a Series A investment from venture firm Accel Partners (press release). Although the funding amount was not listed in the press release, VentureWire is reporting the number to be $2.5 million U.S. (with a projected $3.25 million U.S. first round goal). It also announced that Larry Augustin (formerly of VA Linux) has joined the company’s Board of Directors and that Bob Bickel (formerly of JBoss) is serving as a “key strategic advisor” for the company.
Although Hyperic itself is not an open source company, its HQ management product is geared toward open source customers. The product was originally provided by Covalent as CAMS – The Covalent Application Management Server, but the team left Covalent to pursue this business independently several years ago. Hyperic’s CEO, Javier Soltero, was formerly a Covalent employee.
I visited Hyperic’s San Francisco office in early 2005, and the company was operating in true startup mode – one large room packed with people, limited furnishings, poor lighting, and a small conference room for meetings. Metered street parking was available nearby. It actually brought back some fond memories of the early .com days. Flush with cash, they may have new space plans in mind (or maybe not!).
Although the systems management space is a complex market dominated by the big guys, Hyperic is focused on the growing open source management issue. They should join the Open Management Consortium (OMC) that I mentioned in yesterday’s posting.
As a disclaimer, you should know that I was a Covalent CAMS customer and a beta site for Hyperic’s HQ while I was at La Quinta. In fact, the Hyperic / JBoss partnership was born out of a conversation I had with Marc Fleury in May 2004 in the back seat of a car on the way to dinner, but that’s a story for another time.
LinuxWorld Magazine has an article by Paul Sterne and Nicholas Herring today on open source investments entitled “The Open Source Venture Capial Universe“. There are some interesting figures in the article that help to paint a picture of the activity, and Matt Asay blogged about this (“Open source VC: Now a good time to invest?“), as well.
Automattic, the commercial operation of the team behind the WordPress open source blogging software (somewhat obvious disclosure: this blog uses WordPress) has taken its first round of external funding.
It is not disclosing the name, type of funding or the amount, but given Toni Schneider, CEO of Automattic is a partner at early stage VC True Ventures we’d be surprised if it didn’t contribute to the round, but we’re endeavoring to find out the details and will update this posting with them when we have them.
UPDATE: Toni got in touch and has now in fact listed what details the company is prepared to release on his blog, appropriately enough. The money – the amount of which is something Automattic’s not disclosing – comes from CNet, Blacksmith Partners, Polaris Ventures and Radar Ventures. Blacksmith Partners also invested, although the partner that invested, Phil Black is now at Schneider’s True Ventures,
WordPress founder Matt Mullenweg described the funding as “a small amount of capital” to insure the company dealt with potential scalability crunches before they happened.
Schneider came on board around the start of 2006 after being a VP at Yahoo! for a couple of years following its acquisition of his startup Oddpost. Automattic is also the home of the Akismet trackback and comment spam blocking service.