Open Source Projects Find Funding Lifeline as Corporates, Startups Step Up

A growing shortage of funding for crucial open source technologies is leading to a surge in support from startups, corporations, and even venture capital firms, reports TechCrunch.

Recognizing the critical role open source plays in their success, companies are stepping up to support these projects. Bloomberg launched its FOSS (free and open source software) fund last year, pledging up to $90,000 annually to various projects. In October, Indian financial services company Zerodha followed suit, launching its FLOSS/fund with a $1 million annual commitment to open source initiatives.

"A significant portion of our success and growth is owed to FOSS," said Zerodha CTO Kailash Nadh, highlighting the dependence of many tech companies on open source technologies.

While some open source projects evolve into commercial entities, many remain community-driven and lack direct monetization opportunities. This has prompted a rise in funding initiatives, both reactive and proactive, to address the gap.

In 2022, a $30 million pledge from major tech companies was announced to bolster open source security following the Log4Shell vulnerability. However, proactive efforts are also gaining traction.

Sequoia Capital launched its open source fellowship in 2023, providing equity-free capital to project maintainers to cover living expenses for up to 12 months. The program has since expanded to support up to three qualifying projects annually.

Two recent recipients of the fellowship are Chatbot Arena, a popular open source AI model benchmarking tool, and vLLM, an open source library focused on memory management for LLMs.

"The Sequoia grant supports the development of Chatbot Arena's website, covering full-stack development and server maintenance costs," said Wei-Lin Chiang, co-creator of Chatbot Arena, to TechCrunch. "This is a gift to support the open source project, with no future obligations."

Sequoia is not the only VC firm to provide equity-free support. Andreessen Horowitz launched its open source AI grant program last August, with Chatbot Arena's umbrella organization, LMSYS, being among the recipients.

The creators of Chatbot Arena and vLLM, both born from research at Berkeley's Sky Computing Lab, have no immediate plans for commercialization, highlighting the need for alternative funding sources.

"At the moment, we do not have a plan to transition it into a stand-alone company – we are solely focused on making the open source project useful and widely adopted," said Simon Mo, co-creator of vLLM.

The growing reliance on open source technologies in AI and data infrastructure is driving a significant increase in funding pressure for project maintainers, according to Ion Stoica, a professor at Berkeley and a Sky Computing Lab advisor.

"You have multiple kinds of GPUs, you have all of these other accelerators, and there’s also a difference in scale," Stoica said. "Ten years ago, most of the funding for a new startup would go to adding people; today, it’s going to infrastructure."

To address this challenge, Sentry, a developer tooling unicorn, launched the Open Source Pledge in 2021, encouraging companies to contribute financially to open source projects. The program requires companies to pledge at least $2,000 per year for each developer they employ.

"The primary intent with the Pledge is no-strings-attached payments to open source maintainers," said Chad Whitacre, Sentry's head of open source, to TechCrunch.

The Pledge has garnered support from numerous companies, foundations, and even venture capital firm Accel, which has invested in several open source startups.

"In the case of open source software, while it can be used for free, users who find it essential are inherently motivated to ensure its sustainability," said Dan Levine, an Accel partner. "The open source community, particularly on the demand side, needs to reassess its strategies and make more informed decisions to support critical projects. The Pledge is an excellent effort to galvanize the demand side to do what’s in their own best interests."