The Other Half of Funding Open Source  🔗 **Source:** [The Other Half of Funding Open Source](https://marucchi.com/funding-open-source-private-equity/) 📄 **Full text:** ![[Full Document Contents/Articles/The Other Half of Funding Open Source.md|The Other Half of Funding Open Source by marucchi.com]] ## Highlights - Public funding can keep the open-source commons alive. But who funds the companies that bring it to the enterprise? ([View Highlight](https://read.readwise.io/read/01kt1hdtrqs13jnfndkpxvs7jg)) - Public funding can keep the open-source commons alive. But who funds the companies that bring it to the enterprise? It's essential to recognize that the commons represents only part of the funding ecosystem that supports & advances open source. What about the companies that advance the ecosystem, employ the community that moves it forward, create the platforms underneath, and the intricate framework that popularizes it? They operate on private capital. ([View Highlight](https://read.readwise.io/read/01kt1hkxaj2r6j71bkfgcyq725)) - Note: Central thesis — open source needs both public commons funding AND private commercial capital. - Tags: atom/literature/h1 - who pays for the commons that "open source first" assumes will be there to choose from? ([View Highlight](https://read.readwise.io/read/01kt1hfb25jp9ej387ggkxcaz9)) - The commons is the core of the open-source project itself, founded and maintained collectively, and what Joost, Dries, and the EU-STF are arguing for is the right way to keep it alive ([View Highlight](https://read.readwise.io/read/01kt1hfz1zm790vwre2nvmcz9j)) - or open source to thrive, I believe, it has to scale, and the enterprise organizations that adopt it accomplish that. It needs commercial companies to translate what the commons has built into something an enterprise can actually adopt, deploy, and rely on. Those companies enlarge the entire ecosystem. They employ the maintainers. They ship the code into the enterprise. They run on private capital. Public money for the commons. Patient capital for the companies. Public funding can underwrite the first. It cannot operate the second. ([View Highlight](https://read.readwise.io/read/01kt1hgkezpm32mjpbcnprdh1q)) - Private equity did something different. It bought into mature businesses (sometimes outright, sometimes a partial stake), and its job was to *add* something. Operational discipline. Better systems. Patient stewardship. The firm took dividends along the way, but they came from genuine cash flow, not from leveraging the company against its own balance sheet. Whatever the specifics of the deal, the firm and the company were aligned on one thing: at the end of the hold, the business was supposed to be worth more because the PE firm had been in it. ([View Highlight](https://read.readwise.io/read/01kt1hm0jjc2d85vhgzmkhf902)) - Note: Historical PE = adding operational value from real cash flow, not financial extraction. - Tags: atom/literature/h2 - Open source is even more sensitive. The projects and the companies that steward them operate on timelines that are simply incompatible with quick flips. Communities take years to build trust. Maintainers do not respond well to being treated as cost centers. And the moment a stewarding company must choose between mission and extraction, the talent that made it valuable starts looking for the exit. ([View Highlight](https://read.readwise.io/read/01kt1hm2w0w8e23g5ynkmkm8jw)) - Note: Why extractive PE is especially destructive to open source: trust and maintainer retention can't survive compressed hold periods. - Tags: atom/literature/h3 - Communities take years to build trust. Maintainers do not respond well to being treated as cost centers. And the moment a stewarding company must choose between mission and extraction, the talent that made it valuable starts looking for the exit. ([View Highlight](https://read.readwise.io/read/01kt1hj18ss3g2tss71fgb2rh6)) - The question is not whether private equity is in open source. The question is which playbook those firms are running. ([View Highlight](https://read.readwise.io/read/01kt1hkng35r39gvgn6sthgx4x)) - Open source is not a hypothetical thesis. The proven outcomes date back to the late 1990s and span nearly every part of the modern stack. IBM's acquisition of Red Hat is the obvious headline; the deeper story is the lineage of serious open source businesses that have quietly built durable enterprise value alongside it. They built companies with real revenue, defensible positions, mission-driven teams, and the kind of slow-compounding moats that traditional PE was originally built to recognize and strengthen. ([View Highlight](https://read.readwise.io/read/01kt1hm5amhga9c0h6k3vrzw7s)) - Note: IBM/Red Hat cited as proof — analysis flags cherry-picking: success example without counterbalancing failures. - Tags: fallacy/cherry-picking - Dries and Joost have both argued that public procurement should reward vendors who contribute upstream, not just vendors who ship open source. That changes the math for which kind of capital wins enterprise contracts. Quick-flip operators do not contribute; the cost-benefit does not work on a short hold. Long-hold operators can. Procurement reform, if it happens, does not just fund the commons. It tilts the playing field toward the kind of patient capital this article is asking for. ([View Highlight](https://read.readwise.io/read/01kt1hnan3swzqwyqws71gya2f)) - Joost is asking the policy world to fund the commons. I am asking the capital world to remember how it used to fund the companies. ([View Highlight](https://read.readwise.io/read/01kt1hp1qf5jnj2ks4wyymbxqm))