TLV Partners

1. 1
June 2015

2. Open Source
“open source as a development
model promotes a universal access
via a free license to a product's
design or blueprint, and universal
redistribution of that design or
blueprint, including subsequent
improvements to it by anyone.”
Source: Wikipedia
2

3. Open Source SW in Numbers
3
Source: Black Duck, ComputerCorldUk, IDC
Number of
Open Source
Projects
>1.8M
485 of the top 500
Supercomputers
run an open source
OS.
80% of
Smartphones
run an open
source OS
(Android)

4. 4
Source: protecode

5. Open Source SW is widely used
Black Duck Software and North
Bridge's survey found that
​78%of companies run open
source software
5
Source: ZDNet

6. The Power of Community
6

7. The Community as a Double Edged Sword
“Having some components of your solution
stack provided by the open source
community is a fact of life and a benefit for
all. So are roads, but nobody accuses Fedex
or your pizza delivery guy of being evil for
using them without contributing some
asphalt. Commercial entities provide needed
products and services, employ people and
pay taxes. We might want them to make
more open source contributions , and some
do, but they are not morally obligated to do
so.”
7
Merv Adrian
VP Research, Gartner
2011-Present

8. Customer Decision Factors
8

9. Customers’ Decision Factors - Open Source or Not
• Better SW quality
• Lower costs
• Freedom from vendor
lock-in
• Security
• Flexibility
• Internal technical
capabilities
• Support
9
Source: Black Duck - The 2015 Future of Open Source Survey

10. Order of costumers’ decision factors Over the years
2011
Freedom from vendor
lock in
Lower costs
Flexibility
Better SW quality
2012
Freedom from vendor
lock in
Flexibility
Better SW quality
2013
Better SW quality
Freedom from vendor
lock in
2014
Better SW quality
Freedom from vendor
lock in
Ease of deployment
Ability to access
source code, add
features and fix code
10
1 1 1 1
2 2 2 2
3 3 3
4 4

11. Decision Factors For Open Source
Software Procurement
11
Source OSS-Watch

12. The Market
12

13. Expected High Growth
“In the coming years, we will see open source
unlock the potential of a new generation of
technologies—the Internet of Things, big data
and cloud computing creating many billions in
value.”
Source: http://www.northbridge.com/
13
Paul Santinelli
General Partner at North Bridge

14. Open Source Resource Volume
14
Source: Black Duck
The number of open source projects grows significantly

15. Top Open Source SW Deals
Company Date IPO/M&A Post Deal
Valuation/Price
Red Hat Aug 1999 IPO $9.2B
Cloudera Inc. Mar 2014 $900M funding round led by Intel $4B
Sourcefire Jul 2013 Acquired by Cisco $2.7B
Novell Nov 2010 Attachmate Corporation $2.2B
Hortonworks Dec 2014 IPO $1.1B
MySQL Jan 2008 Acquired by Sun Microsystems $1B
Sourcefire 2007 IPO $700M
Cygnus Solutions 1999 Red Hat $675M
XenSource Oct 2007 Citrix Systems $500M
Jboss Jun 2006 Acquired by Red Hat $420M
Springsource Aug 2009 Acquired by Vmware $362M
Zimbra Sep 2007 Acquired by Yahoo! (and later by Vmware
on 2010)
$305M
15

16. Top 10 OSS Venture Dollars Raised
121
121
124
129
131
135
194
200
330
1041
0 200 400 600 800 1000 1200
SugarCRM
Mirantis
Joyent
Kaltura
MuleSoft
MapR
DataStax
Hortonworks
MongoDB
Cloudera
16
Source: Tomasz Tunguz @ http://tomtunguz.com/open-source-software-environment/

17. Most Promising Open Source Software Companies
17
Source: Black Duck – Open Source Rookies of The Year
Company Description
Appium Test Automation Framework For Mobile Applications
Docker Enables developers to pack, ship, and run any application as a lightweight container
Exercism Crowd-sourced code reviews on daily practice problems
Ghost Publishing platform that is beautifully designed, easy to use, and free for everyone
InfluxDB Distributed, Time Series, Events, and Metrics database with no external dependencies
OpenDaylight Collaborative open source project that accelerates adoption of software-defined
networking (sdn) and creates a solid foundation for network functions virtualization (nfv)
OpenIoT Enables a new range of open, large-scale intelligent internet of things (iot) applications
using a utility cloud computing delivery model
Serverspec ServerSpec tests for your servers configured by puppet, chef, or anything else
Tox Secure instant messaging, video conferencing, and more
XPrivacy
Prevents android-based applications from leaking privacy sensitive data and can restrict
the categories of data applications can access

18. Pros and Cons for
Software Producers
18

19. Pros and Cons for Software Producers
• Marketing greater penetration
• More likely to establish an industry standard and gain
competitive advantage (especially in “infrastructure”
domains – for example MySQL and Hortonworks)
• Creates community and get free testing, free bug
fixing, free users’ opinions
• Promote the company’s image, reliability including its
commercial products if exist
• Helps build developer loyalty as developers feel
empowered and have a sense of ownership of the end
product
19
Source: Wikipedia Open Source Software

20. Pros and Cons for Software Producers
• Complex business models
• It’s a “less paved” road
• Community as a double-edged sword
• Can we go back?
• Is it good for revenues?
• Is it good for M&A/IPO
20
Source: Wikipedia Open Source Software

21. Business Models
21

22. “Free” Software
22
“According to the Open Source Initiative,
‘free software’ and ‘open source software’
are interchangeable phrases. It’s just that
the word ‘free,’ in this case, doesn’t mean
‘without cost.’ Instead, it has to do with
being liberated from the traditional walls of
proprietary solutions…”
James White, Hongkiat

23. Developers vs. Adopters
23

24. Business Model/Strategy
1. Services Model
The Company sells services – maintenance, support, training. The support
can be priced per “buckets” (e.g., ElasticSearch) or as a subscription (e.g.,
Red Hat)
2. SaaS
The open source project serves as a foundation for a SaaS offering.
Customers pay per hosting, streaming, and delivery of the software.
3. Freemium Model / Commercial Plugins
The company sells separately premium commercial add-ons, applications
and modules (e.g., Jaspersoft, Joomla). Often, The company releases
software under an open source license and sells premium features on top
of it.
24

25. Business Model/Strategy – Cont.
4. Dual License
The company releases the code under a standard commercial license and
under an open source license. The open source serve as an up-sell to a
commercial enterprise edition (e.g., MySQL)
5. Non-Profit Business Models
Non-profit organizations which are not interested in making profits. Funding
might come through donations, investments or crowdfunding. (e.g., MIT,
Stanford, Technion) source: HONGKIAT
6. Mix-and-match
The usage of any combination of the above. (e.g., Katura, 10gen)
25

26. Investments
26

27. Investment In Open Source Compamies
398
669
920
1300
0
500
1000
1500
2011 2012 2013 2014
$M
Venture Investment in Open Source
27
Source: Black Duck (DowJones/VentureSource)
8 14 18
33.9
0
50
2011 2012 2013 2014
$M
Average Deal Size

28. Andreessen Horowitz
$100M, Jul 2012. GitHub is a social network for
programmers which allows collaboration by forking
projects, sending and pulling requests, and monitoring
development.
$11.2 (total round), Jul 2012. Meteor is an open source
platform for building web apps.
Undisclosed Angel Round, Apr 2013. Open Coin develops
the Ripple open source payment protocol.
28
Source: crunchbase, plivo, techcrunch

29. Andreessen Horowitz - Cont.
$7.5M, Mar 2015. Tachyon is a memory-centric distributed
storage system enabling reliable data sharing at memory-
speed. It achieves high performance by leveraging lineage
information and using memory aggressively.
$1.7M, Aug 2013. Swiftype is building search software for
the next generation of websites and applications. Founded
by Quin Hoxie and Matt Riley in January of 2012, Swiftype is
funded by YCombinator and other angels and VCs.
$1.75 (total round), Dec 2012. offers Global SMS & Voice
calls for businesses of all sizes.
$5.8M, Mar 2012. Offers fast & simple mobile payments
technology that aims to allow consumers to checkout from a
mobile site or app in under five seconds with one-tap.
29
Source: CrunchBase, plivo, TechCrunch

30. Peter Fenton
• A Successful open source investor
• Currently a Partner at Benchmark
Capital
• Made successful Investments in many
OSS Companies (for example):
o Docker, Estimated value of $1B following 2014
investment round.
o Hortonworks, Valued over $1B in NASDAQ
o Software AG, Valued $2B in NASDAQ
o Zimbra, Acquired by Yahoo! $350M
30
Source: Forbes, Bloomberg

31. Peter Fenton – Cont.
Lately he also invested in:
Cockroach Labs - Deveolps cockroachdb which enables
developers to build scalable applications that can survive
datacenter-scale outages effectively.
Elasticsearch - Open source search and analytics engine
makes real time data exploration
Pentaho - Open source search and analytics engine makes
real-time data exploration.
Engine yard - leading cloud application management
platform empowering developers and devops to provision,
manage and monitor applications in the cloud.
31

32. Greylock
Docker – open platform that enables developers and system
administrators to create distributed applications. $95M (total
round)
Famo.us – Open source JavaScript framework that enables
developers to build beautiful apps with 3D physics-driven
animation. $1.1M (total round)
Cloudera – Enterprise software company that provides
Apache Hadoop-based software and training to data-driven
enterprises. $40M (total round)
Typesafe is dedicated to helping developers build Reactive
applications on the JVM. $14M (total round)
32
Source: CrunchBase

33. Accel Partners
Weaveworks - Weave is an open source software project for
containers and Docker especially. Total funding: $5M
ForgeRock – ForgeRock provides solutions based on top
quality open source software for companies and government
organizations. $30M (total round)
Couchbase - The developer of Couchbase Server, an open-
source, NoSQL, document-oriented database optimized for
interactive applications. $60M
33

34. Index Ventures
34
Minio – Minimal object storage server written in Golang and
licensed under Apache license v2. Minio is compatible with Amazon
S3 APIs. $3.3M
Elastic – The company behind Elasticsearch, Logstash, and Kibana,
three open source projects focused on scalability and ease-of-use
that help you make sense of your data. $70M (total round)
Pentaho – Open source search and analytics engine makes real-time
data exploration. $40M
OpenX – Open Source ad server, trusted by more than 30,000 web
publishers in over 100 countries. $25M

35. New Enterprise Associates
Mongo DB - The next-generation database that
helps businesses transform their industries by
harnessing the power of data. $80M, Jan 2015
MapR Technologies - Provides an enterprise-grade,
big data platform that supports mission-critical and
real-time production uses. $80M, Jun 2014
IIX Inc. - The company's SDI platform enables
programmable interconnection between networks
that allow customers to improve security, reduce
costs associated with IP transit delivery and
optimize network performance. $10.4M Jul 2014
35
New Enterprise Associates is a global venture capital firm that
invested in over 9 Open Source companies over the past few years.

36. Do’s and Don’ts
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