Fundraising and M&A for Open Source Companies with Daniel Jarjoura

This week on the Business of Open Source I spoke with Daniel Jarjoura, an investor at Avolta who specializes in developer-facing companies, and who writes a newsletter on developer-facing startups and also collects data on investments in open source companies. We spoke about the overall state of investment for open source companies and specifically the state of investment in open source companies in Europe.

Here’s what we talked about:

• Differences between venture funding for OSS companies in Europe and in NA
• How open source companies were relatively stable in terms of getting venture funding, even as the entire venture funding ecosystem was in free-fall.
• How it might be true that European investors don’t understand open source companies, but on the other hand plenty of North American investors invest in European companies.
• Do developers trust open core companies? We had a discussion about whether or not open source companies have a trust problem…
• How important communication is for open source companies, something that I think is very true — a lot of the problems that open source companies run into when they either adopt an open core model or even when they do a license change.
• How founders can do a better job communicating with their VCs, including how to do a better job targeting appropriate investors.
• What do optimizing for in the VC relationship … and spoiler alert, that is for money. You might want a perfect VC who can make introductions, give you advice, give you money, be nice, etc. But the most important thing is the cash; focus on that. The second most important is the introductions. But advice isn’t something you should count on from VCs, and that really isn’t a VCs job, anyway.
• We finished the conversation with a discussion about M&A for open source companies.

If you want good advice about your open source company, you might want to work with me. If you want an opportunity to talk with other founders about things like M&A for open source companies, communicating with VCs, and other topics specific to open source companies, you should join us at Open Source Founders Summit May 19th and 20th in Paris.