Market Milestone: Tidelift Raises $25 Million B Round to Improve Open Source Business Models

Key Stakeholders: CIO, Enterprise Strategists, Enterprise Architects, Software Asset Managers, Software Developers, Open Source Maintainers

Why It Matters: Open Source is an increasingly important part of the enterprise software portfolio and yet the support, maintenance, and contributions to open source projects are often haphazard, risky, and poorly funded. Tidelift provides a channel to allow organizations and enterprises to effectively fund the founders and maintainers of strategically important open source projects.

Key Takeaway: With this round of funding, Tidelift is well positioned to continue supporting the mission of supporting open source developers through the Tidelift Subscription of security, maintenance, and licensing commitments, through 2019 and beyond.

On January 7, 2019, Tidelift, an Open Source subscription and maintenance company, raised a $25 million Series B round co-led by General Catalyst, Foundry Group, and former Red Hat executive Matthew Szulik. This round came only seven months after an initial $15 million A round and will be used to help Tidelift continue to support Open Source developers, creators, and maintainers seeking financial support so that they can focus on the Open Source projects and packages that they work on with a professional level of support.

Tidelift provides open source users with the opportunity to sign up for the Tidelift Subscription, which provides a combination of security, maintenance, and licensing capabilities for enterprise customers that come from the initial developers of the open source projects being supported. The funds from the Tidelift Subscription are then used to pay the developers who are providing the ongoing maintenance and support.

The need for the Tidelift Subscription comes from the current state of open source, where enterprises are gaining billions of dollars in value from open source software that are being supported by best-faith, part-time efforts by individual developers on the one hand, and then by sets of corporate developers and maintainers on the other hand who may have their own sets of priorities such as Microsoft, Google, IBM, Intel, Amazon, SAP, and Facebook. Although these large organizations have been strong contributors to the open source community, they may also have their own conflicts, preferences, or agendas simply because of their breadth of products, services, and corporate interests that a standalone contributor or maintainer may not have.

Tidelift has reached this level of funding by successfully committing over $1 million to Open Source developers to support security, maintenance, and licensing needs and getting to a point where Tidelift estimates that 35 million open source repositories are dependent on packages that are part of the Tidelift Subscription.

From Amalgam Insights’ perspective, Tidelift plays an important role as a Manager of Managers in the software management world. As a key player in supporting open source developers and maintainers, AI believes that Tidelift is well positioned to bridge the gap between the long-tail of projects that require full-time management and the developers and service providers seeking to close that gap for businesses and organizations.

But the timing of this funding was also important. Amalgam Insights believes that 2019 will be a more difficult and unpredictable financial year from businesses between the unpredictability of the stock market, increasing interest rates, and geopolitical and domestic policy uncertainty. In response, Amalgam Insights notes that highly-regarded private companies are locking up funding right now while money is prevalent, risk is still relatively low, and funders are perhaps willing to give a little extra to companies that they feel are strong bets.

With this B round, Tidelift both establishes that it is a company that its investors believes in and that it is sufficiently funded to execute on its open source support mission over the next 18-24 months without having to further worry about funding. Amalgam Insights looks forward to seeing how Tidelift Subscription continues to grow over 2019 and to see how it starts partnering with Software Asset Management providers, managed service providers, IT consultancies, and other service businesses seeking to improve open source management and support to align their service portfolio with the increasing market share that open source continues to earn.