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NetworkWorldFusion: No more Red Hats?

Apr 13, 2000, 07:45 (2 Talkback[s])

"As far as I can tell after surveying a handful of venture capitalists, the answer is that yes, open source is still hot (despite some seriously slipping stock prices) and existing venture-backed firms will receive additional funding. But don't expect to see a lot more new companies that look like Red Hat and Caldera getting funded."

"Among those in the "definitely still interested in open source camp" is IDG Ventures (an arm of Network World parent company IDG), which invested in VA Linux Systems. Kim Davis, a general partner, says, "We are very interested in open source/Linux because we feel on the server side this represents a huge opportunity for start-ups to provide cost-effective, high-performance products and services to their customers. In addition, open source is a shift in how software is not only developed but also maintained. Companies can now have faster development cycles and leverage the power of remote development."

"Others aren't surprised at what could be seen as a lack of venture investment in open source relative to the hype about the technology. One observer, who asked not to be named, told me that one basic reason open source companies aren't getting the full attention of venture capitalists is that the investors have bigger things to worry about - namely funding business-to-business e-commerce companies that needs lots of upfront capital to build infrastructures."

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