VCs regain interest in open source - Linux.com

Here's an excerpt of the article by Bruce Byfield of Linux.com:

Venture capitalists (VC) first discovered open source during the dot-com bubble at the turn of the millennium. When the bubble burst, open source was connected closely enough with its general failure that all but a handful of VCs lost interest. In the last few years, however, investor interest has started to return, due to growing acceptance of open source software and the success of existing open source companies. What now attracts investors to open source companies, VCs say, is the higher probability of innovative ideas and quicker time to market, as well as the ability to develop niche markets that were previously too small to develop profitably. If they see that the fundamentals for any successful business are in place, investors are finding firms founded on open source well worth considering.

For Lisa Lambert, managing director for software solutions investment at Intel Capital, the renewed interest is obvious as an increasing number of VCs compete for each investment opportunity. In the last few years, she says, "We've found that on every deal." It's one reason why Intel Capital started its Open Source Incubator Program, whose goal is to find projects to fund before their work is monetized. Kevin Harvey, a partner at venture firm Benchmark Capital says that, "There was resistance earlier, but now I think there's tremendous exuberance" at the thought of investing in open source companies.

Lambert can effortlessly reel off the names of VC firms interested in open source investment, including Charles River Ventures, Matrix Partners, Sequoia Capital, and Kleiner, Perkins, Caufield, and Byers.

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