"Venture capitalists intrigued by the red hot stock market debut
of Linux distributor Red Hat Inc. are placing bets on new start-up
open source companies built around software that is given away. ...
So far, the best known open source software is the upstart Linux
operating system that competes with Microsoft Corp.'s Windows
"The growing interest in open source software was
evident earlier this week at the O'Reilly Open Source
Software Convention in Monterey, Calif., when some attendees
sat on the floor in a packed meeting room for a session called 'How
to Finance an Open Source Company.'
The founders and chief executives of some older open source
companies talked about how different the market was a few years
ago. At that time, the concept of open source was not well
understood outside of the community of developers, many of whom
work on open source projects in their spare time for free."
"...Netscape Communications Corp., which gave its Internet
browser away for free -- but not the source code -- went public in
a stunning IPO in 1995. Netscape taught investors about the power
of the Internet in growing a customer base fast, with millions of
users. It dominated the Internet browser market at its IPO."
"At the show, a new company called Collab.net was announced,
with funding from one of Silicon Valley's big venture capital
firms, Menlo Park-based Benchmark Capital, which has also invested
in Red Hat. ... Collab.net... provides services and support for
open source software and its first project is called sourceXchange,
a marketplace to fund software development projects, through the
open source community."
"Another major venture capital firm, Accel Partners in Palo
Alto, Calif., has invested in Scriptics, a start-up company founded
in January, 1998 by John Ousterhout, who created the Tcl scripting
language... Accel considered investing in Sendmail Inc. last year
but the... company needed financing faster than Accel could approve
the deal, so it went with individual investors, so-called angel
"Linuxcare Inc., a service provider for Linux, announced in May
an investment by VC stalwart Kleiner Perkins Caufield & Byers,
which was its first in a Linux company. Now, the San Francisco firm
is in hyper-growth mode with over 80 employees."
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