The Commercial Open Source Report, 2024
Insights on how tech companies are building value with open-source software
Open-source software has fundamentally reshaped our technological landscape, powering critical systems — operating systems, databases, or AI models to name a few — that drive our digital world. Yet, while the open-source ethos has been instrumental, it’s the fusion of this ethos with commercial ingenuity that secures its longevity.
For founders, investors, and IT buyers, deciphering the commercial viability of open-source projects presents a formidable challenge. The path to building sustainable ventures around open-source technologies demands a nuanced understanding of what drives success in this space.
In our report, we take a deep dive into the world of VC-backed commercial open-source companies. We explores the various facets of the COSS ecosystem, including market share, funding trends, community engagement, and more. The findings shed light on the complex interplay between financial backing, community popularity, and strategic alignment with open-source foundations.
The report can be found here.
Here’s a summary of the key findings:
1. Market share and regional funding dynamics
- Despite only making up about 10% of the top GitHub open-source projects, COSS companies are 50x more likely to land in that top chart as opposed to FOSS projects
- The United States dominates the landscape of VC funding for COSS, contributing 82% of the total investment over recent years. However, EMEA’s share is rapidly increasing (from 4% to 30% between 2020 and 2023), notably powered by IA ventures
- The increasing share of the VC market captured by COSS ventures indicates rising confidence among investors in the economic prospects of these companies
2. Community visibility vs. economic viability
- Data shows a lack of strong correlation between community metrics (like GitHub stars and contributor counts) and economic potential (measured by VC funding amounts). This suggests that a project’s popularity within the developer community does not necessarily equate to its attractiveness to investors
- Conversely, some COSS companies with considerable VC backing do not show corresponding levels of popularity on GitHub (measured by stars and contributors). This disparity indicates that financial investment alone does not guarantee a vibrant community or widespread use
- The metrics of community engagement and financial backing should be independently evaluated as they may serve different strategic purposes and success factors within a COSS company
3. Impact of company seniority on community engagement:
- The age or seniority of a company is more strongly correlated with community visbility and contibution than the amount of funding it has received.
- Consequently, older COSS companies tend to have a more loyal and active community, which can be attributed to established trust and reliability over time.
4. Role of foundations in open source projects:
- Donating core technologies within a foundation (or building a commercial offer on top of a foundation core) is a popular strategy among established COSS projects, with nearly half of established project (ie. most funded bucket) choosing this route.
- Foundations provide a neutral, stable environment for project governance and can enhance a project’s credibility and long-term sustainability.
- Engagement with foundations is often seen as a positive factor by investors and can lead to more successful outcomes, suggesting a strategic path for new COSS ventures aiming to enhance their funding prospects and market stability.
5. Trends in licensing choices
- Permissive licenses remain the favorite in the COSS community, with their less restrictive nature allowing easier adoption by developers and most frictionless integration of open-source code into proprietary products.
- This licensing choice aligns with Top-of-the-funnel objectives of COSS companies aiming for broad market adoption and flexibility in product development.
- The prevalence of non-OSI licenses is under 10%, indicating that while there is some movement towards alternative licensing, traditional OSI-approved licenses still dominate the landscape.
About Serena
Serena is one of Europe’s leading venture capital funds, with $750m under management.
Founded in 2008, Serena invests at early stages, from seed to series A, and supports the success of innovative and ambitious entrepreneurs to service a better world. Born of the profound conviction that a venture capital fund should be at the service of its portfolio companies, Serena has set up the largest operational support team in Europe and the most active startup community, the Serena Squad, with more than 550 active C-levels.
Serena has a strong focus on AI, SaaS, Climate Tech, Digital Transformation, and Impact. Serena has invested in more than 100 startups with several international success stories such as Dataiku, Malt, The Fork, Electra, Descartes Underwriting, Accenta, Lifen, and AramisAuto. Combating climate change, protecting biodiversity, promoting sustainability, diversity, and inclusion are at the heart of Serena’s DNA.
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