Most startups and quick-risers promoted publicly are building intellectual property on top of open source software stacks. Aside from avoiding upfront investments towards license, is there any positive impact in doing so?
Several posts on the Internet that I found (http://wrlawfirm.com/BlogWP/featured_business_legal_articles/open-source-can-impact-a-company-valuation/ and http://timreview.ca/article/324 ) seem to agree that using open source software stack has adverse impact on company valuation due to the higher risk in licensing infringement, etc.
What provides a better company valuation:
which one values more: OSS + proprietary IP, or
license ownership + proprietary IP
Start-ups and quick-risers are building upon open-source software for a number of reasons:
I would argue that it is more important to choose the correct tools so that products/services that will generate revenue can be developed within the shortest available time-scales.
I would characterize the first article as FUD. The gist of the article is that if you violate an open source license, you could be sued. That is true, but it is straightforward to use open source software and comply with the licenses. If you want to be really cautious, limit your self to BSD/MIT style licenses, which are very permissive and very easy to comply with.
The second article is TL;DR.
I worked at a small startup that got acquired by a very large company. During the acquisition, the acquiring company took a very close look at our use of OSS (and we used a lot). Our use of OSS had no effect on the valuation.
It affects your valuation positively and negatively.
First, negatively. Using open source software will decrease your valuation (from the perspective of the ones doing the valuation), because it's not an asset that belongs to you, and it's not an asset that you control. Had the same software been owned by you, your company would be worth more.
Now, positively. My company developed a product where we used two large, open source software libraries. Had we developed those libraries ourselves, we'd be two years behind where we are today, and worth a lot less.
So, it just depends on how you look at it.
This is honestly too difficult of a question to answer in generalities because in the end, the answer is "it depends."
As Brian said, building upon OSS helps bring your product to market quicker, but at the same time, it's not something that you can control.
In the short term, if you're looking for funding, I would say it devalues your company because it's not an asset you can control.
But once you have a product to market, and you've made tweaks to the OSS to fit your individual requirements as you've gone, and you're finally at the point where it's your product, and you're making money from it, it can possibly increase your value.
If you're looking at being acquired by a company though, it all falls down to how much someone is willing to pay for you.