Open-source investing perks up
Data from the National Venture Capital Association confirms what anybody following open-source has already seen: more small companies are launching around open-source products and business models.
Through the third quarter this year, at least 18 companies have received funding, totaling nearly $145 million put into companies with "open source" as part of their business plan description.
In 2004, there were 12 companies funded, bringing in $70 million.
The latest round of open-source companies are seeking to build a business mainly around open-source database or middleware. By contrast, the first wave of open-source start-ups in the late 1990s mainly focused on Linux.
In 2000, venture capitalists invested $226 million in open-source companies, which got on average $19 million in funding. So far this year, the average funding is $8 million.
Virtualization company XenSource grabbed the most money this year with $23 million, followed by SugarCRM with $18.7 million, and SpikeSource with $15.8 million.
That influx of money has some people wondering whether there are too many open-source companies getting funding.
Don Dodge, an executive with Microsoft's emerging business group, is one that believes that the open-source model has limits. In a blog post on Monday, he wrote: "There are VERY few VC investment opportunities in Open Source. There will only be one or two winners in each space, and the larger spaces are already covered."