Slashdot Mirror
Open Source Venture Fund Unveiled
prostoalex writes "Over the next three years Simula Labs will finance 6-8 open source startups with $10-15 million it got from venture capitalists, News.com says. The venture financing enterprise is mostly interested in hiring the founders of the project and selling the services based around product infrastructure. LogicBlaze and Mergere are among the first startups who got financing from Simula Labs, and it looks like a logo that incorporates orange and brown is required before you apply."
Both sites seem to be structured in the same manner with similar page titles and similar wording for content.
Today yada yada yada more than ever yada yada yada your needs yada yada yada our solution yada yada yada. Open Source adopts market speek
Ah, but one of the joys of the software business in general is how little capital you need. It's possible to waste money, but that only happens when you're suffering a slight concussion from VCs hurling obscene amounts of cash at you and demanding that you waste it.
I wonder how these ventures will work out. The transition from being an independent OSS project to being a captive part of a services organization can't be easy. Holding customers' hands as they deploy last-year's release is very different from writing the next bit of cool code.
The solution will be to find a management staff that can balance software development tasks versus providing services -- keeping both the project personnel and the customers happy. I'm guessing that they will do this by putting project people into "guru" positions and doing the bulk of the sales and service work with an army of hired underlings.
Two wrongs don't make a right, but three lefts do.
It depends. Of course, the investment pattern tends to be that smaller investments yield less exciting returns, but obviously this isn't always true. It's better to have lots of fingers in lots of pots rather than dumping all your cash onto one hope.
I currently have a service which is blowing up in popularity (several thousand users, 300,000+ requests a day in only a few months) and getting lots of donations.. but users are saying they're ready for a commercial solution and so I'm working my ass off to get a totally kickass new version ready.
Problem is.. I have existing clients. I can't ditch those guys on a hope and a prayer.. so my spare time is minimal. Just $20K or so would let me hire the help I need to kick it up several notches, as well as keep me comfortable for several months while it builds up even further.
Of course, it's not going to turn into a $1 million/year income, which is why regular VCs wouldn't be interested (well, unless I ended up with tens of thousands of PAYING users.. not too far fetched I guess). So I guess there's an investment opportunity, but it's a tiny tiny one.
Think about it. A new category of startup: The Open Source Startup Model. As any self-respecting Slashdot denizen, I naturally haven't read the article. Others mentioned that 10 million spread among 6-8 startups would not be enough to fully fund a startup. I agree, but if I was running such a fund, I don't think I'd want all of the startup funding coming from one primary source anyway. The OSS teams I'd want to finance would be those that already had something going, i.e. some software already in place. Then I'd want to at least see a plan for filling in the "Step 2: ?????". Why finance something that already exists? Because you don't want to start with a just a concept that may or may not work. Also, you already have a potential customer base (just have to figure out a way to not piss them off).
What would be the advantage of an OSS startup? It's a great way to leverage goodwill--people like OSS software and its developers. Also, OSS usually contribues to the greater good of society.
What existing projects would be good candidates for this? I'd like to hear from others on this. My votes would be for 1. Mambo--PHP Web Content Management. 2. Nagios--enterprise system monitoring and alerting software.
I don't think I'd be willing to fund, say, PHP or MySQL because they are too mature to benefit from $1-2 M, plus MySQL already is an established enterprise.
BTM
That was the turning point of my life--I went from negative zero to positive zero.
I note that the web pages for both start-ups don't know the English language -- in particular their use (actually mis-use) of commas. And the style is distressingly similar. It looks like a fraud to me.
Others mentioned that 10 million spread among 6-8 startups would not be enough to fully fund a startup
Yeah, well others don't know what the hell they're talking about. It's absolutely possible to bootstrap a new company on far less than 1 million dollar. You can't say anything meaningful about it unless you know "the plan".
I'm just replying to your post because I think it's silly the way people talk about startups these days (not you; the others). There certainly are products/markets that require more capital investment in early round financing, but you also have to remember that it's pretty damn uncommon that a company will raise more than a million in round 1 financing. Usually the higher amounts will come in subsequent rounds. This should, again, all be part of "the plan".
Seriously, if you have a good idea for an Open Source based startup, go for it! The main thing it requires is your drive, not cash. But also, I personally think it's very important to plan. Plan what you intend to do, in a realistical manner (have someone else cross check your estimated times, preferably someone that has done software projects before), but definitely TALK with people about it. You may find that others get so excited you don't need to take any financing.
And don't get a cent more financing than you absolutely need. Remember that every cent you take as an investment now, you will be paying back based on high risk investment standards; we're not talking 5% interest rates here. These guys may end up owning more than half of your company before you know it.
One last thing before I stop my rant and continue working on my own lil thing; Don't fool yourself; VCs are not investing money in OSS startups because they think they are so cute. Or because they are of such morally high standards. They are doing it for one thing, and for one thing only; to make as much money as they can from the enterprise.
So go out and do your thing; you don't need a million dollars to do it!