31 commercial open-source software startups that will thrive in 2020 – Business Insider

The economic downturn sparked by the coronavirus pandemic may be hitting many industries hard, but investors say that it may turn out to be a positive opportunity for commercial open source startups.

These types of startups build and maintain open source software that is free for anyone to use, download, or modify. While the software itself is free, these kinds of startups traditionally build a business on top of it by selling customer support or custom-built services for the enterprise.

Investors say they're still betting on open source as the rest of the tech industry encounters turbulence because several of the best tech companies, like Airbnb or Dropbox, have historically been founded during economic downturns including many of those like Canonical that build popular open source software.

Indeed, OSS Capital founder and CEO Joseph Jacks says that he expects adoption of open source software to accelerate during this period. It's often cheaper than proprietary software from the likes of Oracle, SAP, or Microsoft, for starters, which makes it an appealing alternative for companies cutting their IT budgets.

"Open source is much cheaper than proprietary software," Eric Anderson, Scale Venture Partners, told Business Insider. "Enterprises will look at alternatives to some of the proprietary software they're paying for."

There are some structural advantages for these startups, too. Open source software is generally developed by distributed teams of volunteers all over the world. This means that the startups that emerge to support open source software is usually similarly distributed, and more ready to work remotely. That's an edge in a time of global stay-at-home orders, Jacks says.

"Those companies, in fact, are going to do really well in a society and culture and environment where everyone is forced to be as efficient and as productive as possible using the internet and remote tools," he said.

Jacks says the current situation has only reinforced his belief in investing in these types of companies because of how the world has had to adapt.

"It's definitely not changed anything about the way that we get excited in enterprise," he said. "It only made things more concrete."

What follows is a compelling list of commercial open-source software startups set for success in 2020, according to 12 VCs. They range from fledgling companies with hardly any funding to well-established ones that could very well be heading for a huge exit. Funding and valuation information are estimates taken from Pitchbook, the keeper of such data.

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31 commercial open-source software startups that will thrive in 2020 - Business Insider