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Ask an Open Source Venture Capitalist 118

Richard Gorman, of Bay Partners, is a venture capitalist. Part of his job is to seek out and finance open source companies. He's not easy to snow technically; he has a Master's degree in Computer Science from MIT. And he's not easy to snow financially, either; he also has a Master's in Management. This is a golden opporttunity for all you budding entrepreneurs out there to find out exactly what a tech-hip, management-hip venture capitalist looks for in an open source-based startup. (As always, Slashdot interview rules apply.)
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Ask an Open Source Venture Capitalist

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  • What is The Secret Handshake to join the Secret Society?
    • getting your resume summary posted on a slashdot summary.
    • Dear Sir (Score:1, Interesting)

      by Anonymous Coward
      I have been told that open source represents communism. Please explain how you reconcile this concept with venture capitalism. Thank you.
    • by Rei ( 128717 )
      When your company goes bankrupt under questionable accounting practices and SEC investigators are closing in on your Cayman Islands accounts, do you plan to wreck your stolen Ferrari going 200 on a state highway, or do you plan to set up annuities that can't be confiscated by the government for your family, then flee to Heard Island and live out your days in an ice cave?
  • by AKAImBatman ( 238306 ) * <{akaimbatman} {at} {}> on Wednesday October 04, 2006 @01:13PM (#16308055) Homepage Journal
    Your profile states your feelings that a "very strong team" is important to the success of a startup. However, most startups only have the basis for a technology team in place, and rarely have a strong executive team. In a recent interview with Robert X. Cringley [], technologist-cum-Venture Capitalist Bill Joy stated that his firm worked with startups to assist in installing team members that are missing from a venture. (Google is an excellent example of this in action, with Page and Brin turning over the Chief Executive reigns to the more experienced Eric Schmidt.)

    What are your thoughts and opinions on this practice? Does your firm assist startups with more than just financial matters, or do you feel it important that the startup be fully formed by the time you invest?
  • Exit Strategy (Score:5, Insightful)

    by blinder ( 153117 ) * <blinder DOT dave AT gmail DOT com> on Wednesday October 04, 2006 @01:15PM (#16308087) Homepage Journal
    In my (very) limited experience in dealing with the VC world, one of the key concepts that was always in any discussion was the exit strategy. Typically that translated into IPO or sale to someone else. Is this any different with respect to open source companies?

    It just seems to me, and I'm just a knuckle-dragging developer here (who also engages in diy projects), that the exit strategies might be a bit different than your traditional concerns.
    • Wish I had mod points, this is a very interesting question to get answered. Exit strategy is always a key question when discussing business with VC people.
    • That's just what I was wondering. Open source is such a powerful force, yet making IPO kinds of money off it seems quite difficult.

      In my own experience, open source takes over where profits leave off. Once the profits have left a market, you get all kinds of open source projects supporting it. So long as there are strong profits to be made, the developers prefer to sell their wares. Seems pretty natural to me. The obvious exception is M$, as monopolies have different market dynamics. In the age of rob
      • by aevans ( 933829 )
        So the hardware is expensive and it costs a lot for the maps. So it looks like the software isn't the problem. You might get them to open source it. It's like thinking you'd get free movies if you open source DVD player software. You still have to create the content and have the hardware to play it. It doesn't make cameras and crew any cheaper.
  • by andyring ( 100627 ) on Wednesday October 04, 2006 @01:16PM (#16308093) Homepage
    Mr. Gorman,

    In general, what qualities in an open source project do you find attractive and worthy of consideration for venture capital?
  • Common Failures (Score:5, Interesting)

    by paulevans ( 791844 ) on Wednesday October 04, 2006 @01:16PM (#16308105) Homepage
    What are the most common problems that most startups have when begining talks with you?
    • by b0r1s ( 170449 ) on Wednesday October 04, 2006 @02:01PM (#16308923) Homepage
      Having started a small website, that quickly turned into a medium sized website, that led to mentions in Private Equity Weekly, calls from Turner, speaking engagements, and emails from a couple Investment Banking firms, at what point should a startup seek outside funding vs. trying to bootstrap their way to success? We wanted to carry it as long as we could (we're not losing money, we can afford to run at this level forever), but we have since been equaled (or, in some cases passed) by a dozen or so copycats with big bankrolls funding their marketing and PR.

      At this point, it feels like we've missed the boat (though our traffic and membership is higher than ever before), simply because we didn't take on the outside management and marketting expertise that would have come with real funding.

      The question, then, is: does there exist a fundamental 'right time' to contact a VC/IB to avoid losing your competitive edge? Or, does it always vary by company?
      • by morcego ( 260031 ) *
        Pfft. I can answer this for you, based on my enterpreneurship experience (worked with 30+ startups).

        The answer is: as soon as you reach "break even" and have had at least 60% of your investment returned, provided a few other criterias are met. Before that, you risk loosing control (and thus your competitive edge). After that, you risk getting put out of the game by other players that have more money than you do.

        Don't kid yourself with ideas of the "bright great future". All other (relevant) things being the
  • by s20451 ( 410424 ) on Wednesday October 04, 2006 @01:19PM (#16308153) Journal
    I have graduate degrees and experience in engineering, and I have good managerial and interpersonal skills. I have often wondered what it would take to sit on the other side of the table, and what it is like to have plenty of funding, helping other people bring good ideas to market.

    How did you get your job? Is it hard, easy, boring, fascinating, soul-destroying, fulfilling, all of the above?
    • Re: (Score:1, Redundant)

      by malahoo ( 128370 )
      I'm also considering a career in VC. What is the lifestyle like? How do the hours compare to, say, the 24x7x365 in a start-up, or the 9-to-5 of an accountant?
    • Re: (Score:1, Interesting)

      by Anonymous Coward
      This is America man, rich people are born rich.
      You get born on 3rd base, and then spend your life thinking you've hit a triple.
    • by Inda ( 580031 )
      I have no graduate degrees but am experienced in engineering. I know the law of the jungle so well that some people think I'm Tarzan. I too have wondered what if would be like to sit on the other side of the table and what is may be like to have plenty of money.

      Can you lend me $1000 until payday?
  • While Mobile is certainly hot among the young demographic groups nad mobile device sales have over taken sales of both servers and desktop PCs by a 2 to 1 ratio is often hard to break into this market as an opne source mobile application solutions company. What obstacles do you see in the form of: -Services Marketing -Tiered Markets -Funding -Mobile Operator Lock out I have wondered at times why Mobile Operators who geographically distant do not band together as VC fund to fund new mobile application
  • Venture capitalist for the open source sounds like a great way for someone to make a ton of cash off some patents (and patents are bad news). What do we need open source capitalists for when established corporations have gone "open"?? What does open matter if the code is linked to non-open code? What needs more protection science or commerce???

    A documentary about the invisible war on culture.
    Features RMS, Danger Mouse (of Gnarls Barkley and the Grey Album), Lawrence Lessig, and more...

    htt []
  • Why Open Source? (Score:5, Interesting)

    by bit trollent ( 824666 ) on Wednesday October 04, 2006 @01:23PM (#16308209) Homepage
    Why have you chosen to fund Open Source based companies?

    From a Venture Capitalist's point of view what advantages do open source based companies have over other software companies?
  • CS and mgmt (Score:5, Interesting)

    by gEvil (beta) ( 945888 ) on Wednesday October 04, 2006 @01:23PM (#16308211)
    A masters in both CS and management? I'd love to see some of the arguments he gets into with himself...
    • by Anonymous Coward
      A masters in both CS and management? I'd love to see some of the arguments he gets into with himself...

      That's more insightful than "Funny".

      For example, how many ideas that were/are great ideas from an engineering perspective, but you had to pass because there wasn't a market for them? And what was it about those ideas that made them unmarketable?

      I'm sure there are plenty of times where the business and engineering clashed.

    • He probably comes to better conclusions than most people (including myself) who don't/can't consider all points of view.
      • Oh, I fully agree. It's the same as saying that an evolutionary biologist who also has a degree in theology will have a better grasp on the arguments made from both sides and where they're coming from. It adds to their depth of perspective.
  • What are the most common mistakes that tech startups make when they approach VCs such as yourself?
  • The Magic Ingredient (Score:5, Interesting)

    by Phoenix666 ( 184391 ) on Wednesday October 04, 2006 @01:26PM (#16308275)
    You can and must know your subject area, in this case, tech. You also need to put together a business plan and shop it around. But the thing that there doesn't seem to be a lot of help out there on is the magic ingredient: learning to think like a Yankee trader. There's a certain kind of thinking that works out ways to monetize a technology product or service. Sales people kind of have it. MBAs don't have it, or if they do, in small degrees (learning the CAPM doesn't teach you how). Engineers definitely don't have it.

    So where/how can the aspiring entrepreneurs among us learn how to think about how to make money with their marvelous inventions? Do you have any books, organizations, or workshops you could recommend?
  • When do you pull out (Score:5, Interesting)

    by cyborch ( 524661 ) on Wednesday October 04, 2006 @01:30PM (#16308345) Homepage Journal
    Given that the nature of venture capitalism is to fund startups, at what point do you pull out? Is there a critical size of a company which is a warning to pull out and cash in? If so, what size is it?

    To put it more precisely: When, in your opinion, does a startup stop being a startup, and do you pull out and cash in when that point is reached?
  • by Anonymous Coward on Wednesday October 04, 2006 @01:30PM (#16308351)
    In general, what drives you to fund a startup? Just as interesting would be what drives you away from funding a startup (other than the obvious answer of "their idea sucks").
  • by psykocrime ( 61037 ) <> on Wednesday October 04, 2006 @01:31PM (#16308367) Homepage Journal
    Traditionally it's held that one of the things a company should have, if seeking venture capital, is "proprietary technology." Obviously in the
    case of an open-source company this will never hold. Open-Source based businesses are always fundamentally different from an old-school technology
    company in that you're not really selling bits; you're selling "something else" where the "something else" may vary depending on the business model.

    So given that, and the thesis (mine at least) that the barriers to entry for competition are lower for an open-source company, what do you look for
    in a potential investment? Are you looking for some radically new and innovative business model; with accompanying patent? Or is it all
    about execution, suggesting that a would-be open-source company has to meet a higher standard in terms of attracting business and establishing
    a customer base *before* getting funded?
    • Bad form to reply to oneself, but I should point out that I'm NOT a fan of "business process" patents, not do I advocate getting such things.
      But they do exist and in the context of the question do seem relevant, which is why I asked. Please do not take my post as
      an endorsement of business process patents (or patents in general).
  • by Cr0w T. Trollbot ( 848674 ) on Wednesday October 04, 2006 @01:33PM (#16308419)
    More than once, I've seen the founder of a startup get thrown out of his own company by venture capitalists, despite the fact that it was his idea and technology in the first place. How do I structure a VC deal so that I can't be kicked out of my own company?

    Crow T. Trollbot

    • by frank_adrian314159 ( 469671 ) on Wednesday October 04, 2006 @02:12PM (#16309117) Homepage
      How do I structure a VC deal so that I can't be kicked out of my own company?

      Oh! This one's easy!

      You can't. It's *their* money. Even if you can't be kicked out, they can destroy the company out from underneath you. If you can't live with this fact of life, find alternate funding sources.

      Actually, the fact that you're even asking this question shows that you're enough out of touch with the reality of the situation that you probably shouldn't be looking at VC funding at all.

      In general, the VC's *do* want you to succeed. Places where you might have conflict generally revolve around three issues - your performance in your chosen position isn't very good, you have a hard time "playing with others" including personnel the VC might bring in to help you (and by asking for VC money, you've already acknowledged that you can't do it on your own), or there's a fundamental disconnect in your vision and the vision of the board WRT strategy (in which case, you shouldn't have taken the money in the first place).

      VC's are not there to screw up your life, steal your work, or eat your children (OK, maybe the eat the children thing, but...). They are there to make money. As long as you and *their* company can help them do that, you're golden. If you can't, you should be kicked out.

      • Re: (Score:3, Informative)

        by Neologic ( 48268 )

        Actually, the fact that you're even asking this question shows that you're enough out of touch with the reality of the situation that you probably shouldn't be looking at VC funding at all.

        Actually, the fact he is asking the question shows he is in touch with reality- its a good question and one that comes from seeing previous examples of founders losing their companies.

        Speaking of reality, your statement shows that you probably aren't tactful enough to answer questions without slipping in some sort of

        • And what I'll say is that if you look at the "horror" stories, there are usually one of the three issues I mentioned involved (most of which are never mentioned by those doing the story telling). Yes, people may be busy building their own companies, but if they have time to listen to horror stories, they should also have time to hear about the reality of the situation. If they don't, they have an issue with doing due dilligence, anyway. So, I stand by my take on the situation - I don't think that people
      • by Svartalf ( 2997 )
        It also shows that you actually know diddly about VC too.

        Yes, it's their money. It's typically NOT given as an "investment" in the same sense as what we'd associate
        with investments, though. It's typically framed as a loan of X dollars, with a 2-5 year use of proceeds, and
        a payment term for the loan with grants of shares in the company, and options to extend the use of proceeds, etc.

        Yes, it's their money, but unless you get tattooed with them having the option to exercise control
        at any time over your compa
    • by argoff ( 142580 ) *
      This really does happen, if I hadn't seen it with my own eyes I never would have believed it.

      In one company I worked for, the CEO (who was mutually appointed, but not the founder) immediately started driving the company into the dirt. He would do things like a big company CEO would do, like get into global car rental agreements. Things that would probably work for a large company, but are absolutely insane and suicidal for a small startup.

      When it became obvious that the CEO was making things worse, rathe
  • by daeg ( 828071 ) on Wednesday October 04, 2006 @01:33PM (#16308429)
    Does the license of the open source matter to you? Do you have a preferred form of license, e.g., GPL vs. BSD? Obviously, some licenses are better for the developers to make a buck on versus others which aren't designed to hold cash flow.
  • The most successful OSS ventures have been focused on infrastructure needs (operating systems, networking, file serving, web serving, etc.). We haven't seen the same type of success with back office applications like accounting, ERP, supply chain management, asset management, warehouse management, etc. Is there something inherent in the OSS model that is preventing investment in back office OSS applications? Will we ever see successful OSS ventures in the back office?
  • First on my mind (Score:5, Interesting)

    by UbuntuDupe ( 970646 ) on Wednesday October 04, 2006 @01:37PM (#16308493) Journal
    What are the best ways to actually earn a profit, when you're giving away the source code? Are entrepreneurs in this area limited to "support, support, support", or are there other ways?
    • Re: (Score:3, Insightful)

      by psykocrime ( 61037 )
      You don't need to be an Open-Source VC expert to see that there are options other than just support. At least, depending on how
      exactly you define "support." Consider things like:

      professional services; integration, consulting: "Can you make FooBar2003 work with BlazzleFlaz1998?" "Sure, that'll be $300 / hour
      for custom integration work"

      one-of customizations for $$$: "Can you add a feature to FooBar2003 to make it do Blah?" "Sure, that'll be X-thousand dollars if
      you want the resulting change to be propri
      • True, you can make money that way. But those are all along the lines of "write the code, maybe an opportunity will come up later that will earn us a profit", which isn't the kind of thing a VC would fund, at least, not after 1999.
        • I can sorta agree with that, but not completely. In a sense, all startups have a touch of "let's build this and hope we can make money off of it." I mean, nothing is guaranteed to succeed in the market, even if it's some really clever new technology that's kept proprietary. To me, the big difference between an open-source company and a "regular" company is the lower barrier to entry for competition. Since anybody can come along tomorrow, fork your source, rename it and suddenly you have a new competitor
          • In a sense, all startups have a touch of "let's build this and hope we can make money off of it."

            Yes, but the difference between typical startups and your ideas is that in typical startups they first have an understanding of how it would make them money -- which for post-1999 VC's is nice to know.
            • Yes, but the difference between typical startups and your ideas is that in typical startups they first have an understanding of how it would make them money -- which for post-1999 VC's is nice to know.

              Ok, point taken. However, none of these ideas is entirely speculative; there are companies out there employing some or all of these approaches, among others. Digium [] is a good example of the model that involves selling both hardware and an
              open-source software solution along with training, services, etc.

              I shou
          • by Martz ( 861209 )
            I'd disagree and say its pretty much the same, it's not about creating a product first, marketing it and trying to sell it. It's about being approached by a business to provide a solution. Forget the old method of doing it the old and backwards way - creating something, then finding a market. Instead, find the client and find out what they want to do - find the solution either in FOSS or proprietary software.

            Most businesses wouldn't care if its free and/or open source software or otherwise. They usually jus
  • Open source is not known for tight self-governance. Many techies tend to leave their work unfinished - instead of polishing it they rely on workarounds - which is why I found that they need to be tightly controlled. In a business with proprietary technology this is relatively easy to do, because the techies don't own any of the technology that's being developed. In open source technology fields, however, the techies may have less incentive to stay put, and they may leave the company easier if they feel c
  • by count0 ( 28810 ) on Wednesday October 04, 2006 @01:40PM (#16308565)
    Creating good UI and an overall understanding of user experience is a common shortcoming in OSS. The notable exceptions have had significant help from commercial companies with ui design expertise (say, Firefox, Ruby on Rails). Can you please describe how you think about user experience and OSS, and how that impacts investment decisions?

    - initial thoughts on the UI when assessing products (obviously not so important for server tools)
    - thoughts on UX expertise of the team
    - more importantly, how you take a promising OSS company and add UX expertise?


  • I think I have a great idea for a company that creates a product and provides services - the product would be build on largely on Open Source components and would be largely open-sourced itself (Similar to how IBM WSAD is built on Eclipse). I have a CS background but no MBA / startup experience. What are next steps do you recommend (e.g., books to read, people to contact, plans to formulate) etc. Thanks! -Frank
  • How often do you pass over useful, society-benefitting projects because some other novelty has a better bottom line? Is there funding for such beneficial projects, that may not have a strong commercial opening?
  • 10 Most common (Score:5, Interesting)

    by Anon-Admin ( 443764 ) on Wednesday October 04, 2006 @01:49PM (#16308723) Journal
    In your opinion, what are the 10 most common mistakes open source-based startups make when seeking venture capitol?
  • Would you say a masters in management easily translates into a strong footing in financial understanding?

  • by YoJ ( 20860 ) on Wednesday October 04, 2006 @01:52PM (#16308745) Journal
    Arnold Kling in Under the Radar recommends that entrepreneurs start out by bootstrapping their operation by finding paying customers and actually making money before thinking about outside funding. What are your opinions about this way of starting up?
  • How did you move from the computer science to the VC world? What is the ideal way to make the transition from a highly technical environment to one that is more about business and management.
  • Planning ahead (Score:4, Informative)

    by Rob T Firefly ( 844560 ) on Wednesday October 04, 2006 @01:58PM (#16308839) Homepage Journal
    What do you plan to do for a living after BubbleBurst 2.0?
  • by grondak ( 80002 ) on Wednesday October 04, 2006 @01:59PM (#16308869) Homepage
    I realize the answers to these questions vary by project, but let's say we have a pretty hot idea and the only contribution is the software IP. Let's say it's a web site. We've got something working but need money for a production deployment (ie bandwidth, systems hosting, customer service reps, support staff, etc. In short, our cost model can look like PayPal's cost model).
    1. What amount of control (ie % ownership) typically goes to the investors? 90% ?
    2. How is the VC money returned to the investors? Examples: is it given back as percentage of profit (20 % of gross or NIAT), or like a loan (all returned within 5 years?) or is it in perpetuity (VCs get 20% of everything, forever) ?
    3. Does risk still equal reward? Seems to me the reward in the Internet/OSS project space is outrageously high, but the risk can't get any greater than the money you lay out + potential loss of goodwill/reputation.
    4. What's the percentage in item 2 that VCs actually get for a project like this? 20%?
  • And - even more specific - how is your understanding of doing this job? Do you understand it as bridging two worlds? Greetings, Chris
  • I have an idea (Score:3, Interesting)

    by emil10001 ( 985596 ) on Wednesday October 04, 2006 @02:03PM (#16308957)

    I have a really great idea that I would like to market. Without getting into specifics it's along the lines of (legal) media distribution, and would involve licensing from big television/media companies. I haven't seen anything like my idea out there, and have been activly looking, as I have intrest in this idea as a consumer as well. I think it has a lot of potential and would compete well in the current market.

    My question is this, how does one go about getting started? Could you give a general overview of how a successful startup works, as well as perhaps some good references for further research?

  • I occasionally listen to the Stanford Entrepreneurial thought leaders podcast, [] and Tom Byers mentioned in his presentation on 18 Jan 06 in his section on cashflow (min-36:38), the very high cost of traditional Venture Capitalist funding.

    My understanding of typical Open Source projects is they're typically undertaken by smaller companies with a distributed team, sometimes with many staff working from home, and often have little corporate resources.

    Why should a small company in this situation risk tak
  • Most OSS ideas come from coders with very few business experience, I guess. So the code might be there, but not the business plan. I guess you won't invest at such a early stage. Are you aware of any good concept where to find this marketing know how, so the projects gets far enough to find an investor?

    One of the answers might be 'business angels', but at least in my state, the whole BA scene has disappeared (the local BA organisation has not helped any entrepreneur in the first 3 years of it's existence
  • I have been cautioned by others with startup experience that without sufficient capital to defend the patent you might as well not have the patent in the first place. There is nothing to prevent a competitor with more resources from exploiting it. And even if you do have the funds, defending it be a very lengthy process with many appeals, all the time you could be bleeding more cash than your competitor. How serious of a concern should this be for an open-source software project and should funds for pate
  • Open Source vs. $$$ (Score:3, Interesting)

    by Twixter ( 662877 ) on Wednesday October 04, 2006 @02:14PM (#16309151) Homepage
    It seems that the nature of Open Source, at least on the surface, is counter to the capitalist model. Since the company doesn't have a technological advantage, they will be subject to perfect competition. Being closed allows the company to maintain a technical advantage.

    Why then invest in Open Source? What are the advantages to this model of business from an investment standpoint? Are there disadvantages from an investor's standpoint? How do you weigh those?

  • by mrand ( 147739 ) on Wednesday October 04, 2006 @02:19PM (#16309231)
    Mr. Gorman, There are a few major open source hardware projects (most are listed on wikipedia's open source hardware page [].

    What is your opinion of the open source hardware projects that you are aware of, and do any stand chance of becoming success stories like so many of the software projects have?

    Also, have you come across many business opportunities that could be filled by open source hardware (care the describe them?), or do companies shy away from open source hardware for some reason (if so, why?)?

    Thank you!

  • My question is if I want to send information and/or do a presentation, should I first get a NDA or some other legal document signed by you that says you won't just take the idea and give it to someone you are already dealing with?
    • should I first get a NDA or some other legal document signed by you that says you won't just take the idea and give it to someone you are already dealing with?

      Most VCs will kick you out the door if you ask for an NDA. They see far too many screwball ideas to go through the legal proceedings that an NDA would require. In any case, they're more interested in the implementation of the company than the idea that founds it. i.e. They're investing in monetary potential, not your amazing brilliance.

  • How can we as developers of OS Software improve our chances to get funding? What types of business plans options (support, shrink wrapped software, pay-pal donations, etc...) do you see as being potential profit turners that can result in a return on investment? IOW: What features/functionality should we add to our teams and products to make them more attractive to investors?

  • by Qbertino ( 265505 ) <> on Wednesday October 04, 2006 @04:46PM (#16311445)
    As a lead-maintainer / developer of a successfull open source project and a freelancer and company partner who focuses on OSS I have a three-part question:

    1) How do I get to talk to someone like you? What would be the best approach?

    2) What do you want to see from someone who approaches you? Neat, well formulated ideas? Implementations? Finished business plans? A running company? All four?

    3) What bores you to death and what talks have you had with VC seekers that where a total waste of your time? What where the things they did wrong?
  • by BlueStraggler ( 765543 ) on Wednesday October 04, 2006 @05:24PM (#16312099)

    Take the case of a company that has been in business for 7 years or so, and has successfully bootstrapped themselves into a modest little venture using their own open source technology. They have offices, employees (even salesmen!), a small management team, a decent little client base, and no debt. But they are very much a small business.

    Now, with their hard-fought, real-world experience, understanding of their sector, and practical experience with using open source to make real money, they think they see a new opportunity in the marketplace, which their technology is well-positioned for. But going after this market will require a big investment, at least doubling the company size, and will probably require a whole new management team.

    The question is: how is this problem like or unlike a start-up? Do VCs tackle this situation differently than they would a pure start-up? Should the company approach VCs differently than a start-up would? Or is this out of VC territory altogether?

  • As a college student who is starting up a business, the biggest hindrance is my seeming lack of appearance. What tips would you have for young people with good ideas who want to present their researched business ideas/plans in a way that gets noticed?
  • I have what I believe to be an excellent open source opportunity that I would love to develop around an existing open source product. There are a number of potential concerns however, namely:

    1. The parent software has some issues that may make my company a target for patient and other legal attacks. For example, it uses Mpeg4, and plays DVD's under Linux.

    2. The product would be heavily dependant upon COTS (commercial off the shelf) hardware from a manufacturer that does not provide detailed specifications
  • Back in 2003 Baystar Capital thought it would be a good idea to help The SCO Group with $50m towards fighting opensource. Is there any relationship between Baystar and Bay Partners including any investments in your company?
  • I have code already implemented and complete video presentations and documents on my home page at [] Be sure to check the video demo of VXD. No gimmicks, just implementations. Feedback appreciated.
  • So there is this high-tech, (old) company I really like. Unfortunately, while their stock price was low, a few large investors bought in, big.

    The cash infusion did not a miraculous turn-around make.

    The lack of progress caused calls for cost-cutting. It is easy for the finance people to quantify how much money they would save by cutting salary expense. There is no similar offset for computing the increase in ill will....

    Every year, the company announces another layoff. Every year, the competition (Microso

  • by Samrobb ( 12731 ) on Thursday October 05, 2006 @12:37AM (#16317007) Homepage Journal

    For a lot of technology startups, there's got to be a point where the VCs are interested, but want to do some technical due dilligence. Things like making sure that new technology really does have the potential to perform as advertised, or that the founders aren't making obvious mistakes in areas outside of their direct expertise (ex, embedded hardware requirements from software developers, or software development plans from hardware jockeys).

    So... who do you turn to when you feel the need to do some technical due dilligence on a company you're planning on investing in? Are there any opportunities for nuts-and-bolts technical people to get involved with a VC in this capacity, or is this something that is generally handled in-house or though personal contacts?

  • I have developed a next generation build tool, a make replacement, called KJam ( [] ). I am having some success licensing it under a traditional 'closed' license to software development companies.

    I have received interest from some large open source projects to switch to using kjam as their build tool. The problem is that since they are open source they can only allow development tools in their toolchain which are themselves open source. Since they give all their users the right to

  • by nahdude812 ( 88157 ) on Thursday October 05, 2006 @09:56AM (#16320473) Homepage
    My project (a web based game; see my user profile) sees about 40,000 users every day across the globe. Right now our operational costs (two dedicated servers w/ substantial bandwidth) are 100% funded (and well in the black) by user donations.

    To me, this makes the project a success, and demonstrates clearly that there's a real market for such a project, as users are of their own free will willing to support it wholly.

    Real life gets in the way of me being able to dedicate the same level of devotion that I used to be able to give the project, but I personally am confident that if we had funding that enabled us to hire just one or two developers and purchase some additional equipment, the project could take off like a rocket. We have a huge list of ideas for improvement -- things that we simply don't have the time to successfully realize today, but which we could if it was our job.

    So my question is, what would you recommend we do to seriously pursue getting real funding. How do we first find someone that is not turned off by the idea of an open source model, and second will actually listen to our proposed business plan? When talking to them, what sort of things are they looking for that demonstrates that we're serious, willing to work hard, and aren't just looking for a free ride to tinker around on code?
  • Can I have $100k CAD to develop a multiplatform video game over the next year (sort of an adventure/exploration/sim shipwrecked on a desert island game)? Like id, I'll release the source code when I finish my next project.
  • I run a small open source startup that's doing quite well. We've been profitable every year, and keep doubling (or more) our revenues year after year. I sometimes think that I should seek out Venture Capital to take the business to the next level, but in same thought, I talk myself out of it. The conversation in my head goes, why would I give up a portion of a company that's doing so well to some outside firm? What realistic gains could I make in a short time if I had some VC funding that I can't make now?
  • I really need someone with the skills to blatently state that an MIT CS degree holder can't be stumped technologically, and that someone with a MBA can't be stumped in business.

    Did you approve that copy? Wow. You know better. Nice marketing if you did.

Machines that have broken down will work perfectly when the repairman arrives.