Pentaho Secures $7 Million in Funding, Looks Toward the Future

by Ostatic Staff - Mar. 31, 2010

Open source business intelligence (BI) software vendor Pentaho has raised a cool $7 million in fourth-round funding, bringing it's total funding to around $32 million. Company CEO Richard Daley talked to OStatic about how Pentaho plans to use its cash influx, and has some advice for other companies considering an open source business model.

When Pentaho was launched in 2005, its founders quickly decided to adopt an open source business model after seeing the success of other companies in the commercial open source market. "The five founders of Pentaho wanted to build a company that would leave a long-lasting mark on the business intelligence industry, "says Daley. "After witnessing the success that Red Hat, JBoss and MySQL had in their respective markets, they believed that Pentaho could have the same impact in the BI market. Pentaho was built from the ground up to be a successful commercial open source entity."

Daley advises entrepreneurs interested in building a business based on open source products to pay close attention to both the technology your building and the community growing around it. "[T]here are three critical factors for being successful: great technology; adoption and participation from a large community; and the right business model for monetizing the business. The third factor doesn’t matter at all if you don’t do the first two right. So the advice for a company entering the open source market would be to focus almost all of your early attention on technology and community, just as we did."

A business that secures more than $30 million from investors in its first five years is obviously a company investors believe in. Daley credits three factors that set Pentaho apart from its competition and, therefore, attractive to funding. He says in addition to offering a superior product line and "a combination of technology and value," the company keeps an eye on the big picture."Our long term goal is for BI to be everywhere. We are delivering BI to the masses, whether that is an open source BI tool that a developer uses stand alone, or BI functionality that is embedded inside the applications that business users interact with on a daily basis. To become pervasive, BI needs to start with a lightweight and highly modular platform, be extremely easy to use, be easily embedded into other applications and be highly cost effective."

Previous rounds of funding went toward extending and improving the company's flagship product Pentaho BI Suite. As for the current $7 million the company is about to receive, Daley says, "Business has been strong and what we’re looking to do with the additional funding is ramp up the visibility and business operations of the company, continue to build out our partner program for supporting companies that embed or resell Pentaho software and make some acquisitions to extend our leadership position."

What does the future hold for Pentaho? "Our goal is to become the de facto business intelligence platform. We want to make BI, and Pentaho in particular, pervasive throughout the industry," forecasts Daley. "We want business users to make faster and smarter decisions because of Pentaho software, whether they know they’re using it or not. Look for upcoming announcements about key steps along the way for making BI more agile, cost effective and valuable to developers and business users."