The Linux Foundation | 25 August 2025
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From Term Sheets to Git Commits: Investment Yields 7-14x Exits, 20–34% Faster Funding for Founders, and 27% More Community Builders
AMSTERDAM – Open Source Summit Europe – 25 August 2025 — The Linux Foundation, the nonprofit organization enabling mass innovation through open source, in partnership with Serena, a leading European venture capital fund, and the Commercial Open Source Startup Alliance (COSSA), today released The State of Commercial Open Source 2025 Report, which shows the connection between open source community indicators and venture capital activity. According to the report, the aggregate funding for commercial open source (COSS) startups totalled $26.4 billion in 2024 and these startups average 7x greater valuations at IPO and 14x at M&A, as compared to closed-source peers.
COSS companies consistently outperformed their peers in fundraising velocity, early-stage valuation and liquidity outcomes. For example, the report found that the median IPO valuations for COSS companies were $1.3 billion (vs. $171 million for closed-source peers), and M&A valuations were $482 million (vs. $34 million for closed-source peers). The report demonstrates that open source is not only a viable strategy for startups and investors, it is a superior one, particularly for companies building infrastructure software.
Among the report’s key findings:
- Greater Valuation: COSS firms average 7x greater valuations at IPO and 14x at M&A, as compared to closed-source peers
- Greater Graduation Rates: COSS likelihood of progressing from Seed to Series A nearly twice as high as their closed-source counterparts
- Higher Valuations: COSS companies raise at higher valuations, with median multiples of 1.6x at Series A and 1.23x at Series B compared to closed-source peers, and secure larger rounds, especially at Seed (1.45x) and Series A (1.33x)
- Fund Faster: COSS companies move through the funding funnel more quickly, with shorter time gaps between rounds, 20% faster to Series A and 34% faster to Series B
- Exits are Real: 12% of COSS companies in the venture funnel have reached IPO or acquisition
- Established Investment Category: COSS accounts for an average of 250 deals per year and about $9 billion deployed yearly by investors from 2019-2024
- Open Source Companies Focused on the Backbone of Modern Software: Around 90% of COSS companies operate in infrastructure software rather than business applications
- Commercial Open Source is Heavily Concentrated in the US: The United States (65%) and the European Union (25%) provide the bulk of the COSS IPO supply
- Commercial and Community Value Coincide: Project community measures like distinct contributors and OpenSSF Criticality Score are strong correlates of pre-money valuation
- Both Companies and Communities Benefit from Venture Funding: COSS projects experience a 27% increase in distinct contributors, an 8x increase in dependent projects, and a 7x increase in package downloads on average following funding rounds
"For years, open source founders have had to defend their business model. This report flips the narrative," said Matthieu Lavergne, partner at Serena. "The best performing startups in infrastructure are not hiding their source code—they're sharing it. What we see in this report is open source emerging as the rule rather than the exception for success in infrastructure software.”
“Commercial open source is not just an alternative to proprietary software, it is the foundation of a higher-performing venture model," said Matt Trifiro, founder & executive director at COSSA. ”The data confirms that investment in commercial open source accelerates community health, software quality, economic return and ecosystem growth. Open source is a vital part of the commercial market."
"COSS startups are not only highly valuable companies but essential to open source ecosystems," said Frank Nagle, Chief Economist at the Linux Foundation and Research Scientist at the Massachusetts Institute of Technology (MIT). “The data is clear: commercial open source companies not only compete with proprietary models, they often outperform them — reaching higher valuations with greater efficiency. When capital and community are aligned, investment can fuel their growth, adoption, and long-term impact of open source projects.
The findings draw from two significant datasets of over 800 venture-backed companies and 13 open source community indicators, making this study the most comprehensive view to date of the financial dynamics shaping commercial open source (COSS) businesses. Read the full report at: https://www.linuxfoundation.org/research/2025-state-of-commercial-open-source
Methodology
This report draws on two important strands of data. The first dataset tracks over 800 VC-backed COSS companies globally, exploring their financial journey using 25 years of data from 2000 through 2024. The second dataset adds a layer of open source community indicators to the financial analysis. Exploring nearly three years (June 2022 through May 2025) of data on open source community indicators covering all public GitHub repositories managed by the COSS companies in the sample. Community data collected to evaluate the correlation between community and commercial OSS initiatives was scored using the Open Source Security Foundation’s (OpenSSF) Criticality Score. These metrics include factors like project age, commit and release cadences, diversity and contributor growth.
As the premier publication from the newly formed Commercial Open Source Startup Alliance (COSSA), the State of Commercial Open Source report represents the culmination of work begun in late 2024 under Linux Foundation incubation. COSSA intends to contribute to this report annually to track the evolving landscape of commercial open source.
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About COSSA
The Commercial Open Source Startup Alliance (COSSA) is dedicated to strengthening the discipline of commercial open source. The organization delivers shared data, mentorship, and best practices to support entrepreneurs, investors and communities building the next generation of open source companies. Learn more at https://cossa.io.
About Serena
Serena is one of Europe's leading venture capital funds, with €1 billion under management. Focused on AI, SaaS, Climate Tech, and Deep Tech, Serena has invested in more than 100 startups, including Dataiku, Malt, and Electra. Learn more at serena.vc.
Media Contact
Allison Stokes
The Linux Foundation
pr@linuxfoundation.org