January 27th, 2009
Bucking the trend, handful of open source players attract VC funding
Venture capital spending is down eight percent nationally yet a number of open source companies have scored big funding wins as of late.
Talend, which develops open source data integration software including Open Studio, this week announced it secured $12 million from investors Balderton Capital, an early investor in MySQL, and existing investor AGF Private Equity. This brings the firm’s total funding to more than $20 million.
JasperSoft, Lucid Imagination, Zenoss, Open X-Change are among the roster of open source companies and startups that recently received capital infusion, in spite of a worsening investment climate.
According to a recently released venture capital survey conducted by MoneyTree and cited by the Boston Globe, venture capital spending last year topped out at $28 billion — a decline of 8.4 percent — and the first annual decline since 2003. In the fourth quarter, VCs generated $5.4 billion. Of that, software startups snagged $4.9 billion, the survey maintains.
A number of hot startups and growing open source application providers are recipients.
Lucid Imagination, a newly-announced commercial venture that provides open source enterprise search software based on the Lucene/Solr project, for instance, announced earlier this week that it raised $6 million in Series-A funding from Granite Ventures and Walden International. The company said the funds will be used to hire technical staff and for sales and marketing.
Meanwhile, Zenoss, a provider of open source management software, recently announced an additional $4 million in funding from Silicon Valley Bank, bringing the total to $15 million in venture capital investment in 2008. Recently, Zenoss announced a series of new customers including Tyco Electronics, Cap Gemini, Formica and iStockphoto and established customers UTStarcom, Medifast, OpSource, OmniPresence, Broadcom, Johns Hopkins and Rackspace renewed their annual subscriptions.
Jaspersoft, a respected open source business intelligence software provider, reported in December that it secured $12.5 million in venture funding from Adam Street Partners and Red Hat.
In November, open source e-mail and collaboration software player Open-Xchange, closed $9 million in additional funding which will be used to expand its business in the U.S., Europe and expanding markets, the company said. The round of financing was led by eCAPITAL entrepreneurial Partners AG, BayBG and existing investor BayTech Venture Capital. The company has quadrupled its paid mailboxes to 8.4 million in 2008.
Yet the money available continues to dwindle. In the fourth quarter, venture capital firms invested $5.4 billion in startups — representing a decline of 33 percent from the same quarter a year ago and a 26 percent decline from the third quarter, according to the MoneyTree survey published by the Boston Globe.
Paula Rooney is a Boston-based writer who has followed the tech industry for almost two decades. See her full profile and disclosure of her industry affiliations.
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