New open source venture funding and the importance of SAP Ventures and Intel Capital

I suppose the big news for me today, as an Alfresco employee, should be that we just closed a $9 million Series C round with SAP Ventures leading the round. But since we didn't need the money (not even remotely) and I didn't want the dilution, it's not my favorite news of the day. Let's just say that companies don't always raise money for the money.

I was actually much more intrigued to see Zenoss add $11 million in Series B funding. Or Intel Capital's Series A investment in REvolution Computing, which provides an open-source statistical tool with commercial support and leverages parallelism.

Perhaps the big story out of the Alfresco and REvolution investments is the activity of Intel and SAP in financing open-source companies.

Intel Capital has funded Red Hat, SuSE Linux, JBoss, MySQL, Zend Technologies, Fonality, CollabNet, and Black Duck. SAP Ventures? Black Duck, JasperSoft, Intalio, Groundwork, MySQL, Ping Identity, SocialText, Zend, Red Hat, and Sistina. These two companies have funded a large swath of open source's top companies. Not all by any stretch, but many.

So here's Intel, which apparently owes its existence to Microsoft, and SAP has gone on the record over and over in downplaying open source's significance, both funding the open-source revolution. Money speaks more loudly than words do. SAP and Intel clearly think there's something to this open-source thing, even if one accepts the argument that financial investments are separate from their strategic product directions.

SAP and Intel invest to make money, right?

Not always. Both companies use their venture arms to place strategic bets. If I'm an industry observer, it's evident that both companies are placing big bets on open source. What does this mean you should be investing in?

Exactly.

[tharvey111]

Matt, congratulations on your funding and while I understand your concerns about dilution there is an old saying that the best time to get money is when you don?t need it! In addition, as I am sure you know the only valuation that really matters for companies like ours is what the value is on a liquidity event, i.e. being acquired or an IPO. I think having cash even when you don?t need it, especially in a volatile market like we are in now is a very good thing. Lastly, as you said there is also the strategic value of where the money is coming from, that can be important and an asset too. Anyway, I hope it proves incredibly valuable for you and helps to provide further creditability to open source business models like ours. Tim Harvey CEO, XAware

[sanjivaw]

Hi Matt - congrats on the funding! BTW you forgot WSO2 as one of Intel Capital's investments ..

Sanjiva Weerawarana, CEO, WSO2.