Open-source toolmaker acquires Covalent

Interface21, which now goes by SpringSource, is looking to add a little bounce to its business by buying fellow open-source company Covalent Technologies.

SpringSource, which announced the acquisition Tuesday, develops a popular open-source tool called Spring Framework designed to help accelerate the development of Java applications for enterprise servers.

With the acquisition, SpringSource is looking to build on Covalent's products and services that target Apache Software Foundation open-source projects, such as the Apache Tomcat Application Server and Apache Geronimo Application Server. Both companies derive revenues from selling support services.

Financial terms of the deal were not disclosed. But it's unlikely that SpringSource used up all of the $10 million it raised in venture funding last May to do the deal.

In summing up the benefits of the merger, Rod Johnson, SpringSource's chief executive, noted in his blog: "Not only does Covalent bring Apache leadership, but our combined company now has significant leadership on Apache Tomcat and HTTP. Two weeks ago, Sun paid $1 (billion) for the "M" in LAMP. Now that Covalent's outstanding Apache expertise and services are part of SpringSource, we are strong leaders in the "A."

The "M" Johnson is referring to is Sun Microsystem's megabuyout deal of open-source database company MySQL. And the "A," of course, is for Apache. Both are part of the popular open-source development products referred to as LAMP, which stands for Linux, Apache Web server, MySQL, and the PHP development language that is used by enterprise companies and on the Internet.

The acquisition is designed to enable the combined company to become a one-stop shop, providing open-source products and services to quickly develop, test, deploy, and run enterprise applications using Apache Software Foundation projects and SpringSource's Spring Portfolio.

[groyal]

VCs Got Tired of Covalent

After 2 rounds and $31M the owners of Covalent (Menlo et al) got tired of their investment and ditched the company. The first investment was 2001 so they wanted to clean it out of their fund.

[mabrewer7]

Tired Investors?

It is true that after 3 rounds of funding, the investors in Covalent, Inc. decided to pull the plug.

What those VCs had invested in - a proprietary software company trying to sell product based on Apache technologies and later a maker of monitoring and management software (now Hyperic) - is not what Covalent is today. The business model that the investors bought into was flawed - selling licenses for a proprietary version of something that was already widely in use (and available freely under an open source license) in the market was like, as one of the company's investors like to call, "pushing a rope". Add to the limited revenues for this business the fact that 2003/4 were nearly impossible times to be seeking funding, and you have the makings for very tired investors.

The outcome was two separate asset acquisitions by former Covalent, Inc. employees to create Hyperic (providers of the open source HQ product and services) and Covalent which became an open source support company for technologies out of the Apache Software Foundation. I'm proud to say that the result is a company that has grown by more than 500% since the Covalent, Inc. demise. And even more proud to see it become part of SpringSource!

Regards,
Mark Brewer