Inside Open Source #1
All things Open Source: Interesting reads, startup news, trivia and views from Europe
This is the first issue of “Inside Open Source”, the newsletter that covers interesting stuff from the European Open Source ecosystem.
If you ask yourself why the hell anybody would write (and hopefully read) about European Open Source, sit back and let the following fact sink in: Over 90% of the fastest-growing open-source companies in 2020 were founded outside the Silicon Valley, and 12 out of the top 20 originate in Europe (Source).
The hearts of founders, Venture Capitalists and other tech enthusiasts now beat a little faster, just like mine did when I observed and gradually recognized the rise of OSS that happens in my backyard.
With this newsletter, I want to aggregate and annotate all the European Open Source information that I collect in my daily work and beyond. I hope that founders, future entrepreneurs, other VCs, or basically anyone else will find this interesting.
💡Thoughts from the Inside
The accomplishment of open source is that it is the back end of the web, the invisible part, the part that you don't see as a user.
Mitch Kapor - Founder of Lotus Software, Electronic Frontier Foundation, Mozilla Foundation (Firefox)
🚀Fastest-growing open-source startups in Europe
Runa Capital, a silicon valley based venture capital fund quarterly publishes an overview of the fastest OSS companies out there. Runa Capital has invested in several open-source startups, including Nginx (acquired by F5 Networks for $670 million), MariaDB, and n8n, and recently raised a $157 million fund aimed at open-source startups. In their so-called ROSS index (“Runa Open Source Startup index”), they highlight the top-20 open-source startups by the annualized growth rate (AGR) of Github stars of their repositories.
Via this link you can find an overview of the companies and the related key metrics behind their growth. The European companies mentioned in their report are the following:
Hugging Face (Transformers for Natural language Processing)
Plausible (privacy-friendly alternative to Google Analytics)
K6 (load testing tool)
Jina AI (deep learning-powered search framework)
ORY (Cloud-native authentication, authorization and user management)
Webiny (Serverless application framework and CMS)
Element (decentralized and privacy-preserving communication application)
📖What I enjoyed reading
In his blog “Developer Led Landscape”, Tyler Jewell closely examines the dynamics behind companies “whose products were sold to, purchase-influenced by, or consumed by software developers”. Tyler Jewell is a Managing Director with Dell Technologies Capital leading early-stage and growth investments in cloud infrastructure, DevOps, and the “Developer-Led Landscape”. Before his life as a technology investor, Tyler held various C-level positions in developer-related businesses, including The Middleware Company (acquired by TechTarget), Codenvy (acquired by Red Hat), and WSO2 (OSS company with 600 employees).
💡My key takeaways:
Big categories grow in big ways:
With Tyler’s definition, developer-led products account for $40B in annual revenues
At 19% growth, these categories drove $6.4B in new revenues over the last year (2020)
Even at a fraction of the size (because incumbents tend to capture renewal streams), the growth in greenfield new opportunities is substantial
That leads to incentives and opportunities for new entrants to enter and innovate
Fastest growing segments make software delivery faster and safer:
in 2000: 80% of a new application was custom code, and 20% was sourced from a reusable component
in 2020: 20% of an application is custom code and 80% is sourced from a reusable module —> “With the bulk of applications now dependent upon third-party modules, organizations need ways to organize those dependencies and detect, manage, and remediate vulnerabilities that appear in those dependencies”
Companies in the segments Low Code and API as a Product make software engineering accessible to broader developer communities and lower the skill set required for junior developers to contribute to complex software systems (making hard problems simple to solve)
Many companies launched in the past few years (e.g. Code Climate, Pinpoint, Jellyfish, Pluralsight Flow, and Waydev) that set out to increase software release velocity by providing data-driven visibility on bottlenecks in the development process of engineering teams
RPA for DevOps is also a new segment that includes automation solutions to eliminate the complexity of managing complex delivery infrastructure
API-Specialization businesses are materializing:
83% of global Web traffic was through an API at the end of 2018, and it should be approaching 95% by the end of 2020
This has caused the emergence of lifecycle solutions and businesses dedicated to APIs: API IDEs, API testing, and API debugging
Developer Abstractions trigger multi-billion dollar category transformations:
Every 5–10 years, a developer abstraction on top of programming languages, frameworks, infrastructure or platforms happen (example: Microsoft & IBM version control in the 90s vs Git & Github in the 2000s). These abstractions introduce >10x productivity enhancements and create huge markets
Tyler lists some topics that he sees on the horizon, from upcoming programming languages (Darklang, XTC, Julia, Web Assembly, Elm, Rust, Ballerina) to multiple potential solutions to build scalable stateful applications that minimize, avoid, or eliminate the database as a scaling bottleneck
VCs love developer-led products but companies deliver questionable capital efficiency
In aggregate, all of the private companies in the landscape have $10.8B in ARR and raised $49.5B in venture capital, implying a ratio generating $1 ARR for $5 of VC —> for a standard SaaS company that would be considered quite poorly
The emergence of autonomous software development
“As software complexity increases (more APIs, more functions, more microservices, more events), a third wave of software defined by autonomous development will emerge which incorporates instant feedback to allow machines to author software and make changes without human intervention.”
💲European Funding Rounds
Here I would like to present you some of the most exciting European OSS financing rounds of the last weeks (no claim to completeness):
Seldon (UK)
Machine Learning DevOps Platform
€7M Series A with Amadeus Capital Partners, AlbionVC and Global Brain Corporation
Garden (Germany)
Integrated development platform for multi-service backend applications
€3M Seed with Crowberry Capital and Fly Ventures
Weaveworks (UK)
Developer-centric operating model for cloud-native applications and operation of Kubernetes workloads
Jina AI (Germany)
Deep learning-powered search framework for building cross-/multi-modal search systems
€5.5M Series A with GGV, Yunqi Partners and SAP.io
Gitpod (Germany)
Developer platform automating the provisioning of ready-to-code development environments
€3M Seed with Speedinvest, Vertex US and Crane Venture Partners
Codesphere (Germany)
Developer platform automating the provisioning of ready-to-code development environments in the cloud
Undisclosed Seed with 468 Capital, Soleria Capital and New Forge
Let me know if I forgot some interesting investment rounds so I can include them in the next post :)
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