Can I use crowd-funding to switch to an open-source model?


2

I am the technical founder of a 4-years-old startup. After two rounds of funding with small European VCs, some very good customers (government agencies, big retail customer, ...), a unique product and a Cool Vendor award (Gartner), we are running low on cash and entering into a vicious circle: expenses have been stopped, R&D team reduced, ...

In our situation, doing a third round of funding with VCs or selling the company/product is difficult because we are not in a good position to negotiate.

An alternative would be to open-source the product and switch to a new business model. We can either earn money from dual-licensing the code, from support contracts or from paid developments. To do the switch and guarantee the future of the product, we still need to raise some money to continue the investments.

Is crowd-funding a good solution to finance the open-sourcing of a proprietary product? We will need between 500K€ to 1M€. The community will benefit from this release and top buyers can be given some advantages: free support hours, resellers advertised on our website, ...

Has it already been done?

If not a viable solution, what are the alternatives to finance the open-sourcing?

Open Source Fundraising Crowdfunding

asked Dec 13 '12 at 07:34
Blank
Math
111 points

1 Answer


1

Reading

customers (government agencies, big retail customer, ...), [...] Cool Vendor award (Gartner)

and

Is crowd-funding a good solution to finance the open-sourcing of a proprietary product? We will need between 500K€ to 1M€.

.. it seems highly unlikely. Your product seems like a B2B product for big companies (you mention government agencies). It's hard for regular people to become emotionally connected to (software) solutions for large enterprises.

Additionally, the number you state you need is high. It's not impossible to get .5 - 1 million euros from crowdfunding, but most drives are a lot smaller, usually <10.000 USD.

Lastly, .5 - 1 million € to transition from a closed-source to an open-source based business model? It sounds as if your cash burn rate is high, and honestly you should expect pointed questions on why that much money is required for a simple pivot.

The community will benefit from this release

That's the key question! How will the community benefit from this? What is the emotional connection between what you do and the people who give their hard earned money?
answered Dec 15 '12 at 15:57
Blank
Jesper Mortensen
15,292 points
  • Thanks for the feedback. I would more expect big companies investing in a product they are interested to use or to support (for other ones). If 100 companies are paying 5k€, we can reach 500k€. Regarding the goal, it's not only to open-source the code, but to ensure the product success by continuing the developments. – Math 5 years ago
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Open Source Fundraising Crowdfunding