Venture Capital

I came across this blog entry today entitled “F*** the VCs” (while not profane it does contain the “F-word” so don’t click through if you are thus offended). It’s well written, as are most of the comments.

We’ve thought about VC funding at OpenNMS, but I’m not sure it would work for us. Being profitable, we don’t need the money to survive. It’s also not a market share thing – our target market has changed at least five times since we started this and will probably change again as OpenNMS grows and we adapt.

VC money comes in handy when you have something that easily scales, that needs a lot of start up cash and represents something entirely new. If I ran a VC fund I’d be investing in biotech and not open source software.

An open source business plan based on services can scale, just not along the lines of the “write once, sell one million times” of commercial software. It also doesn’t require a lot of start up cash – a laptop, a mobile phone and an Internet connection got me going. And network management is not new – we’re doing things better and more efficiently, but it is not groundbreaking. As John Casasanta shows in his example conversation with a VC, it’s not a question of having a ton of decent programmers but more a core of dedicated and talented individuals.

As I often say, you can’t stick nine pregnant women in a room and get a baby in a month.

Anyway, it was an interesting article so I thought I’d share.

2 thoughts on “Venture Capital

  1. Not that I advocate it but another reason to take money would be to spend on marketing and sales.

  2. Well, that is true. The idea would be that VCs could being cash to the table that would drive marketing and sales to increase revenues enough to offset the chunk of the company you would need to give them for the cash.

    I think this would be a “good thing” in the long run, but in most cases VCs have a fairly small event horizon – on the order of 5 years. I’m not sure if the kinds of returns demanded by VCs can be met with a true open source model.

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