Originally Published: Monday, 5 June 2000 Author: Jeff Alami
Published to: columnists/Jeff Alami Page: 1/1 - [Printable]

The Free Software Entrepreneur's Guide: Part 3

As the saying goes, "to make money, you have to have money." The same is true in the world of free software. So unless you have a rich uncle willing to fund your free software dream, you'll need to find investors.

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As the saying goes, "to make money, you have to have money." The same is true in the world of free software. So unless you have a rich uncle willing to fund your free software dream, you'll need to find investors. The stunning growth of the high-tech industry has wetted the collective mouth of the investment community. Investors have formed organisations known as venture capitalists, or VCs, who provide seed capital and management direction for emerging startups.

VCs have helped to jumpstart many of the Internet companies we know today. And now, with the mainstream emergence of GNU/Linux and free software, these same VCs are poised to jumpstart the bulk of tomorrow's free software corporations. But more importantly, new VCs have emerged, focusing primarily on funding ventures based on free software and GNU/Linux. Let's have a look at some of these new free software VCs.

Linux Capital Group

The Linux Capital Group is the most well-known of these three. Focusing primarily on Linux-based investments, its officers include highly recognizable names within the Linux community, including Bruce Perens and Ian Murdock. Just recently, the Linux Capital Group signed on its first company, Progeny Linux, which will be developing a version of Debian GNU/Linux for scientific and technical uses.

The Linux Capital Group has gone on to create a social contract with the community, which involves these three points: (1) free software will be done right; (2) they'll be responsible members of the free software community; and (3) the community will be represented by an advisory board.

Linux Global Partners

New York-based Linux Global Partners has the largest portfolio of investments of any of the free software VCs, including Helix Code, Code Weavers, MetroLink, and GNU Cash. Like the Linux Capital Group, Linux Global Partners focuses primarily on Linux-based startups, and provides management guidance for their invested companies.

Red Hat Ventures

Being one of the largest free software companies out there, Red Hat has seen fit to become a VC of its own, with Red Hat Ventures. Red Hat Ventures has a much broader view than either of the other two VCs mentioned, looking to invest in "companies that seek to drive the growth of the Internet through the development or deployment of open source software."

Red Hat Ventures has signed on a collection of free software and Internet companies using free software, including: e-smith, which creates Linux-based software for small business gateways and servers; Rackspace.com, an outsourced Web server and hosting provider; Sendmail, providing software and services based on the popular Sendmail mail transfer agent; Techies.com, a careers site for high-tech workers; and ZoneTrader.com, an auction site for surplus and refurbished business equipment.

Conclusion

It's too early to tell which of these three VCs are the best fit for emerging free software companies, or if you're better off looking for more traditional VCs. At any rate, a whole wealth of resources has been presented for the budding free software entrepreneur. What this all comes down to is the simple realization that finding the money isn't the biggest problem -- it's finding the idea.

Jeff Alami (jeff@linux.com) will one day become a free software entrepreneur, so he would no doubt find himself talking to one of these VCs.





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