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NetworkWorldFusion: No more Red Hats?

“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.”

Complete
Story