Open source zigs in a zagging VC market

Open-source venture funding grew in 2008, in sharp contrast to the rest of the industry. Overall, funding levels were 35.5 percent higher than in 2007, according to The 451 Group.

Matt Asay Contributing Writer
Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.
Matt Asay

Over the past year, the open-source business community has collectively donned a hair shirt over stumbles in venture funding, especially when venture funding in open-source companies took an apparent 12 percent slide in the third quarter of 2008.

However, while the second half of 2008 saw declines in open source-related venture funding, overall, funding levels were 35.5 percent higher than in 2007, according to The 451 Group.

Open Source Venture Funding 2008 The 451 Group

This is pretty amazing, when you consider that overall U.S. venture capital investments plummeted 8 percent over 2007 funding levels, as TechCrunch reports.

U.S. Venture Funding 2008 PricewaterhouseCoopers

And if you treat Washington state as a proxy for Microsoft-related funding (a poor proxy, to be sure, but...), well, TechFlash reports that venture funding there dropped 82 percent from 2007 levels.

True, the prospect of an exit for an open-source company is no better right now than for proprietary software companies, which will likely drag open-source investment declines into parity with their proprietary peers.

Still, for now, open source looks more and more like a safe haven in this battered economy, whether you're spending IT dollars or investing VC dollars.