Hortonworks' $100 Million Infusion Heralds Big Open Source Opportunities

by Ostatic Staff - Mar. 26, 2014

Hortonworks, the company focused on the open source Big Data crunching platform Hadoop, has been making waves for some time now, and now the company has announced that it has raised a whopping $100 million in an investment round led by BlackRock and Passport Capital managed funds. The company was formed in 2011, and previously got a hefty $120 million round of financing. Even more notably, this level of funding for Hortonworks, along with a number of other cash infusions for companies focused on open source, is being heralded as a "perfect storm" moment for commercial open source.

Mike Volpi, partner at Index Ventures, has a column up on Recode where he uses the "perfect storm" imagery to characterize the unprecedented financial welcome that commercial open source companies have now:

"Open source, by its very nature, is communal, free or low-cost, hacker-driven, and even anarchist in its approach. So, at first glance, it may seem counterintuitive that a free movement for the “common good” could form the basis for a highly profitable industry. Up until this year, Red Hat was one of the few open source companies with a market capitalization in the billions, but we are already seeing more open source success stories with Hortonworks, Elasticsearch and many others."

Volpi also notes that open source creations and development models have matured and are "cheap but robust, easy to use, but also technically advanced."

The other trend boosting companies focused on commercial open source is that the monetization model that surrounds branching a commmercial offering out from a pure open source project is proven. "Open source companies can also charge for consulting, training, service, connectors and components, much like SaaS vendors do," writes Volpi. 

That business model, of course, was pioneered by Red Hat, which became the first billion dollar a year company focused purely on open source. 

As for Hortonworks, it is benefiting from the fact that in enterprises, as well as small businesses, the Big Data trend--sorting and sifting large data sets with new tools in pursuit of surfacing meaningful angles on stored information--is on the rise. The company has said that it plans to use its new cash infusion to scale its business, which already includes training and support for its own distribution of Hadoop.