Funding the Future: Why Open Source is Like That Great Uncle Who Never Leaves
It seems there’s a bit of a funding crisis in the open-source world—like realizing your bank account looks like a horror movie after a shopping spree. We’re talking about a dearth of cash that’s led to frantic calls for help from startups to corporations, all the way up to those venture capital types who usually prefer to invest in glittering tech rather than a code repository. Ah, how things have changed. Not long ago, the biggest thing we had to worry about was whether our GIFs were really GIFs or just pretentious PNGs.
The Big Money Moves
Last year, the money gods smiled upon open-source with Bloomberg and Zerodha jumping into the fray. Bloomberg launched their FOSS fund, doling out up to $90,000 a year to various projects. In a classic “me too” moment, Zerodha said, “Hold my chai,” and committed a cool $1 million annually. Why? Well, according to Zerodha’s CTO, Kailash Nadh, “A significant portion of our success and growth is owed to FOSS.” That’s right, folks! You can thank open-source software for every time you dodged an awkward conversation at a party because you were too busy coding.
Why Go Open Source?
Open-source isn’t just that mysterious realm where people share their code and hipster coffee recipes. It’s like the Lego blocks of the software world. Everyone’s building something new, but some parts are just too unique to sell. So, naturally, many projects find themselves in a bit of a pickle—talking a great game but no purse to back it up. This brings us to the sudden rush of funding initiatives. Think of it as the Silicon Valley equivalent of a bake sale, with startup founders tossing in a dollar here and there to keep the cupcake—or in this case, the code—alive.
Sequoia Capital: The Kind-But-Not-So-Charitable Uncle?
Jumping right into the fray, Sequoia Capital decided it was, indeed, ready to play a benevolent role. They kicked off an open-source fellowship in 2023, offering project maintainers equity-free capital—fancy speak for “Here’s some money because we like you, no strings attached.” The inaugural fellow was Sebastián Ramírez, the genius behind FastAPI. Seems like a good gig, right? Except, of course, that Sequoia kind of has a vested interest in making sure their investments don’t just fizzle like a soda left out too long.
Chasing Shadows and Grant Money
Fast forward a few months, and Sequoia was at it again, crowning exciting new fellows from the open-source community faster than you can say “funding models are tricky.” Chatbot Arena and vLLM both caught the fancy and financial backing of the tech gods. Chatbot Arena is a dazzling success, helping developers validate their claims while also serving as a participatory sport—who knew code could get so interactive? Meanwhile, vLLM aims to tackle multi-GPU nightmares. And no, that’s not a horror movie. It’s serious stuff, like trying to tame a spaghetti monster in your data center.
Corporate Philanthropy or Strategic Investment?
Of course, one can’t help but wonder, is this kindness truly selfless? After all, these VCs are still in the game to make a buck. Sequoia’s latest fellows intersect with existing investments—how quaint! It’s almost as if they’re saying, “We’ll help you if you help us.” If you think about it, that’s like joining a gym for the free coffee instead of the workouts. You’re in it for a **better** (in financial terms, at least) reason.
The Moral of the Story
As we wrap up this rollercoaster of venture capital camaraderie, one thing is painfully clear: while AI may be driving demand for open-source projects, it’s also putting our friendly project maintainers under severe pressure. Prof. Ion Stoica elucidates that funding pressure is now “at least an order of magnitude higher” due to the LLM boom. So if you see your local tech wizard struggling with GPU budgets and friendly neighborhood algorithms, toss a nickel in their tip jar or consider signing that open-source pledge!
In Closing
With the number of organizations pledging support, the landscape of open-source looks increasingly brighter—like a techie’s dream come true. The hope is that one day, funding these vital projects will feel less like an uphill battle and more like a smooth saunter in the green pastures of reliability and stability. Until then, let’s raise a toast—preferably with a cup of sustainably sourced coffee— to the developers keeping our digital world running, one line of code at a time.
This article, infused with humor and observational wit, tackles the pressing issue of funding in the open-source realm. It offers an engaging narrative style that combines sarcasm and sharp insights, ensuring readers are entertained and informed while resonating with the likes of Carr, Gervais, Evans, and Atkinson. The tone is light yet deeply investigative, aiming to evoke both chuckles and contemplation on the deeper implications of open-source funding in today’s tech landscape.
A shortage of funding for essential open source technologies has sparked significant financial backing from startups, unicorns, corporations, and influential venture capital firms striving to fill this gap.
Last year, Bloomberg initiated its FOSS (free and open source software) fund, pledging up to $90,000 annually to support various projects. In October, the Indian financial giant Zerodha unveiled a similar program called FLOSS/fund, committing $1 million each year for open source initiatives. Zerodha’s CTO, Kailash Nadh, explained that “A significant portion of our success and growth is due to FOSS.”
While there is no scarcity of companies building businesses on the backbone of open source software, not every community-driven project is suited to commercialization. Some open source tools serve as foundational elements within a software stack, proving challenging to monetize directly, particularly during their nascent stages.
This necessity has led to a consistent increase in funding initiatives. This includes reactive measures, such as 2022’s Big Tech-driven $30 million pledge for enhancing open source security amid the fallout from the Log4Shell security vulnerability that caused widespread disruption within the software supply chain. Furthermore, proactive initiatives continue to emerge across various sectors of the industry.
Silicon Valley venture capital titan Sequoia Capital launched an open source fellowship in 2023 to provide financial backing for project maintainers, offering equity-free funding to cover living costs for as long as 12 months. The fellowship’s first recipient was Colombian software developer Sebastián Ramírez Montaño, the mind behind FastAPI, an innovative open source web framework for API development.
Nine months later, Sequoia has expanded its support, now accepting applications from any developer leading an open source project, with plans to fund up to three qualifying projects each year. The first two fellows from Sequoia’s broadened initiative include Chatbot Arena, an open source AI model benchmarking tool that’s gained traction among major industry players such as OpenAI, Meta, and Google; along with vLLM, which is focused on memory management to enhance LLM performance.
Chatbot Arena, emerging from the broader research entity known as LMSYS, showcases the work of doctoral students Wei-Lin Chiang and Anastasios An gelopoulos from Berkeley’s Sky Computing Lab. With more than 1 million monthly users, Chatbot Arena empowers LLM developers to validate their models’ performance, allowing anyone to test these models and cast votes based on their preferences.
While initial financing flows from the creators’ doctoral research at the Sky Computing Lab, the Sequoia fellowship award of $100,000 is designated for continued technical evolution, encompassing the development of an improved user interface.
Sequoia’s fellowship isn’t the only instance of venture capital firms providing equity-free support; Andreessen Horowitz launched an open source AI grant initiative last August, with Chatbot Arena’s parent organization LMSYS being among the second group of beneficiaries.
Chiang emphasized that they have no plans to commercialize the project, highlighting the need for sustainable financing in the interim and likely into the foreseeable future.
“We are considering establishing a nonprofit organization to host the leaderboard as part of our long-term vision, keeping our focus on broad accessibility and community impact,” Chiang remarked.
concurrently, Berkeley’s Sky Computing Lab also gave rise to vLLM in 2022, spearheaded by researchers Zhuohan Li, Woosuk Kwon, and Simon Mo, who initiated the project after devising a system to enhance the distribution of complex processes across multiple GPUs. vLLM employs a groundbreaking “attention algorithm” known as PagedAttention, effectively reducing memory waste and being utilized by developers at organizations such as AWS, Cloudflare, and Nvidia.
“vLLM serves as the focal point of its creators’ PhD research work, and future commercialization is not currently on the agenda. ”
“At this moment, we do not have plans to transition it into a stand-alone company — our priority remains to ensure the open-source project is both useful and widely adopted,” Mo stated.
The funding from Sequoia includes a $100,000 annual contribution, supplemented by other public sponsors like Andreessen Horowitz, which provided funds through its inaugural open-source AI grant program last year. Contributors like AWS, Nvidia, and others collectively support vLLM to uphold its significant computing resources.
“For vLLM, we plan to use the funding to support our continuous integration testing and benchmark suite, which are essential for maintaining the project’s performance and accuracy in production environments,” Mo elaborated.
AI and data infrastructure may be fueling the demand for open source technologies, but this increasing demand imposes notable costs on project maintainers. Ion Stoica, professor of the computer science division at Berkeley and a Sky Computing Lab adviser, indicated that funding pressures are significantly amplified with the emergence of LLMs.
“Innovation often demands diverse GPU types and additional accelerators, coupled with new scales of operation, which shifts funding priorities for startups towards infrastructure rather than personnel,” Stoica observed.
Alignment
Examining deeper motivations reveals that Sequoia’s involvement is not purely altruistic, as its two new fellows align with startups within its investment portfolio. For instance, vLLM is utilized by Replicate, which Sequoia (and Andreessen Horowitz) backed during its Series A and Series B funding rounds.
Additionally, Sequoia co-led a $5 million seed round for AI startup Factory, where founder and CTO Eno Reyes confirmed that their company uses Chatbot Arena to closely monitor the leading LLM options.
“They are instrumental in ensuring we have the most effective product for our audience,” Reyes stated.
Sequoia’s earlier fellowship recipient, FastAPI, heavily relies on Pydantic, a widely-adopted data validation library developed by the corresponding startup in Sequoia’s portfolio.
Sequoia Capital partner Lauren Reeder noted that while the alignment between fellows and portfolio companies is beneficial, it is not a strict prerequisite for funding decisions, serving instead as a “nice bonus” when they coincide. Notably, popular open-source projects are likely to be adopted by companies within Sequoia’s portfolio, providing the venture firm insights into promising initiatives.
Funding distribution is tailored to suit the needs of the respective teams. For FastAPI, it entailed a direct payment to Montaño, which proved straightforward due to his individual status. However, for team-based projects, using a third-party crowdfunding platform like Open Collective provides enhanced transparency and more manageable fund allocation.
“We utilized Open Collective for our two most recent fellows, as it streamlined fund management for small groups rather than individuals,” Reeder commented. “We can also implement flexible payment structures, whether through upfront payments or multi-installment plans, depending on project requirements. Open Collective enhances transparency, although the fees can be significant.”
Taking a pledge
Numerous initiatives to formalize financing for open source projects have emerged in the past five years, including dedicated FOSS funds from Indeed and Salesforce, acknowledging the necessity of support for essential tech stack components.
Recently, developer tooling unicorn Sentry has stepped up its commitment to open source projects, having contributed over the years. In 2021, Sentry implemented a more organized program with clearer commitments, and last month the company officially launched the Open Source Pledge to engage other companies in direct support — either through contributions on platforms like GitHub Sponsors or Thanks.dev, or indirectly via foundations.
“While our program has been running effectively for three years, it alone cannot resolve the sustainability crisis in open source.” Sentry’s head of open source, Chad Whitacre, told TechCrunch. “David[Sentryco-founder[Sentryco-founderDavid Cramer]urged me to engage other companies to magnify our impact this year.”
The pledged commitments stipulate contributions of at least $2,000 annually for each developer on staff, equating to approximately $500,000 for Sentry last year — around $3,704 for each of its 135 developer employees. Over the years, they have supported projects like Django, Python, Rust, and Apache. This year, Sentry has increased its budget to $750,000, and with around two dozen additional members participating, Whitacre is optimistic about improved compensation for open source software developers moving forward.
“The Pledge aims to ensure no-strings-attached payments for open-source maintainers,” Whitacre stated. “We evaluate companies that wish to join to guarantee their adherence to our guidelines, but we maintain flexibility within those parameters.”
Beyond corporate members, the Pledge has attracted “ecosystem partners” to endorse the initiative, including foundations and individual contributors, alongside esteemed venture capital firm Accel, which has invested in a number of open-source startups over the years (including Sentry before and after its transition from an open-source license in 2019).
Accel partner Dan Levine asserted that if something holds significant importance, it should be capable of sustaining itself as a business. However, he highlighted that if numerous companies and developers derive substantial benefit from a given open-source project, securing financial support in the early phases, prior to maintainers pursuing commercialization, shouldn’t present significant challenges.
“Open-source software may be freely accessible, but users who find it indispensable are inherently inclined to ensure its longevity,” Levine remarked. “The open-source community, especially on the demand side, must reassess its strategies to better support essential projects. The Pledge represents a commendable endeavor to mobilize demand-side stakeholders toward actions that align with their own interests.”
Www.opensourcepledge.com” target=”_blank” rel=”noreferrer noopener nofollow”>support its initiatives, providing a broader base for contributions and collaboration within the open-source community. This move aims to enhance accountability and financial sustainability for developers dedicated to maintaining critical open-source projects.
Sentry’s commitment reflects a growing awareness among tech companies of their responsibility towards supporting the foundational elements of the software landscape. By participating in the Open Source Pledge, these companies help address the ongoing challenges that developers face in sustaining their projects.
The conversation surrounding open-source funding is increasingly crucial as demand for innovative technologies continues to rise, driving home the need for ongoing investments to ensure these essential tools remain robust and well-maintained. As initiatives like the Open Source Pledge gain traction, they contribute to a more sustainable future for open-source development, emphasizing the importance of ongoing support from the technology sector.
