Wednesday, April 04, 2007

Vyatta Series B Funding

I am sure that most of you have seen the news that Vyatta announced our Series B funding led by Comcast Interactive Corp. There has been a lot of news about this funding and the move by Comcast to endorse the Vyatta open source system. Needless to say, it is a very exciting time to see this endorsement from such a progressive service provider!

Vyatta has now raised about $18.5 million dollars from four venture capital companies. This funding should take Vyatta far into the future and allow for the expansion of product development, sales and marketing.

To those of us in the venture capital community, this is a modest amount of money for a company that has made as much progress as Vyatta. Yet, there is a perception that open source companies do not need the capital investment required of other, more traditional, startups. Before we did the initial funding on Vyatta, I did a fairly comprehensive study of the open source companies that had been funded across multiple areas of technology (security, storage management, network management, operating systems, and so forth). On average, these companies required $20.5 million dollars of funding before being acquired, doing an IPO or reaching cash-flow breakeven. So, in my mind, Vyatta is right on track.

While building an open source company definitely provides great leverage for engineering and product development efforts, there are a number of business activities that are still inherent to build a successful business. In the case of Vyatta, we've spent money building a world-class service and support organization, staffed engineering to augment and contribute to the open source projects we use and have been fairly active in marketing and public relations. So, yes, we are open source and that helps a lot, but we still have a business to build and run and that takes capital.


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