Open source venture funding on the rise

From the ‘“ree as in freedom, not free beer” files:

It’s still a good time to be an open source startup looking for venture capital funding. According to 451 Group analyst Matt Aslett, funding in the second quarter of 2008 hit $115.5 million an increase of nearly 14 percent over the 2Q07 figure of $101.5 million.

Aslett noted that there were 12 funding deals completed in 2Q08 with an average deal size of $9.6 million.

Overall he’s optimistic about the prospects for open source funding in 2008 as compared to 2007.

“Looking forward, it is a no brainer that open source funding in full
year 2008 will be higher than in full year 2007, although I’m sticking
to my prediction that it will be below the $580.6m raised in 2006.”

Though I don’t disagree with Aslett (and why should I?) the other factor to consider when looking at the open source landscape is the potential for Merger and Acquisition (M&A) activity. With a tight economy, I personally think some startups that might have otherwise tried to go it alone may well jump at a good offer. That could well spark some additional VC opportunities as they look to make a quick buck on the buyout opportunities.

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