OPEN SOURCE BLOGROLL

Open Source Blog

Open source funding in Q1: down but not out
April 02, 2007

Penguin Computing announced that it had raised $9m in second round funding at the end of last week, ensuring that the first quarter of 2007 saw funding in Linux and open source-related vendors top $100m.

In total $100.4m was raised in the first three months of the year, and although that figure was down 27.5% from $138.4m raised in the first quarter of 2006, statistics can be deceiving and it is certainly too early to suggest that any bubble has burst.

The first thing to point out in comparing the figures for 1Q06 and 1Q07 is that last year’s figures benefited from a massive $40m funding round for Linux and open source-based security vendor Barracuda Networks, the second biggest open source funding round in history, according to CBR figures.

Given that anomaly, average deal size is perhaps a better view of how the two quarters compared: 1Q07 saw 11 deals with an average deal size of $9.13m, compared to 14 deals with an average deal size of $9.88m for 1Q06 including Barracuda, and 13 deals with $7.57m excluding that deal.

Another point to mention is that given the large amount of funding raised in 2006 ($475.2m, up 61.6%) it was always likely there would be something of a hangover in the early part of the year as there are a significant number of vendors out there chewing through their A and B funding rounds.

I would personally expect the larger deals to be weighted towards the end of the year (or even into the first quarter of 2008) as those vendors tie up on the details on larger B and C rounds.

From that perspective, $100.4m was a solid start to the year, and it is also worth noting that open source security firm Sourcefire raised an additional $86.3m from its recent IPO.

For the record, the 11 first quarter deals were as follows:

rPath. $9.1 Series B
PostPath $15.0 Series C
Wi-Next $1.3m Credit line
Terascala $3.0m Series A
Fonality $7.0m Series C
Black Duck $12.0m Series C
GroundWork $12.5m Series C
GreenPlum $19.0m Equity and debt
Avidence $5.0m Series A
Adaptive Planning $7.5m Series C
Penguin Computing $9.0m Series B