'Old' Open Source Names Get Lion's Share of VC Funds

Lora Bentley

Venture capitalists are showing open source companies a lot of love so far this year. InformationWeek reported Tuesday that venture capital investment in open source reached $204 million in the first quarter of 2008. Research firm The 451 Group, which set out the numbers in a new report, says the amount is double the investment in open source during the same period last year.


Most of the money went to companies that are beyond "early stage funding," the story says. Examples include customer-relationship management software provider SugarCRM and business intelligence specialist Pentaho.


Notably, open source database vendor EnterpriseDB received $10s million in Series C funding, some of which came from IBM. In a conversation I had last week with EnterpriseDB CEO Andy Astor, he said he believes this is the first time Big Blue has invested in an open source company rather than in an open source project.


On the other hand, Series A funding and "seed deals" accounted for only 4.4 percent of first-quarter VC funding, according to InformationWeek. In a blog post, 451 Group analyst Matthew Aslett notes:

... [S]o many of the old names raised funding in the first quarter, it's difficult to see where significant further funding will be raised in the coming months unless a few more start-ups emerge.

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