The Other Half of Funding Open Source

Joost de Valk has just published a piece arguing that "Open Source First" is the right principle for European digital sovereignty, but not enough. He's right. The letter going before the EU Commission asks public procurement to prefer open source. That answers the demand side. It does not answer the harder question: who pays for the commons that "open source first" assumes will be there to choose from? Joost's answer, alongside Dries Buytaert's and the EU Sovereign Tech Fund proposal, is that public money has to flow into the projects and the federated infrastructure underneath them. I agree with all of it. Please do sign the petition.

But that is only one half of the funding stack open source actually runs on. The commons is the core of the open-source project itself, founded and maintained collectively, and what Joost, Dries, and the EU-STF are arguing for is the right way to keep it alive. But for open source to thrive, I believe, it has to scale, and the enterprise organizations that adopt it accomplish that. It needs commercial companies to translate what the commons has built into something an enterprise can actually adopt, deploy, and rely on. Those companies enlarge the entire ecosystem. They employ the maintainers. They ship the code into the enterprise. They run on private capital. Public money for the commons. Patient capital for the companies. Public funding can underwrite the first. It cannot operate the second. And the patient, operationally engaged version of that capital, the one that built durable businesses for decades, has become almost impossible to find.

So what happened to the original PE playbook? And what would it take to bring it back to the part of the industry that needs it most?

When Capital Understood the Craft

Most of us who went into technology did it for the craft. The pleasure of building something useful out of materials that refuse to stand still. The discipline of doing the same work for years and watching it slowly become something. Whatever the marketing decks say, technology has always been an applied art, and the people who built real companies in this industry knew it.

The capital that backed them used to know it too.

For most of the last forty years, venture capital and private equity played complementary roles. VC backed the new high-risk bets on early-stage, unproven ideas. Most would fail. A few would change the world. The math made sense.

Private equity did something different. It bought into mature businesses (sometimes outright, sometimes a partial stake), and its job was to add something. Operational discipline. Better systems. Patient stewardship. The firm took dividends along the way, but they came from genuine cash flow, not from leveraging the company against its own balance sheet. Whatever the specifics of the deal, the firm and the company were aligned on one thing: at the end of the hold, the business was supposed to be worth more because the PE firm had been in it.

That distinction is everything. Adding value, not extracting it. That was the work.

Two disciplines, two theories of value. The ecosystem worked because both were, in their own way, builders.

When the Calendar Replaced the Craft

Somewhere in the last fifteen years, the lines started to dissolve.

Hold periods compressed. The quick flip became fashionable. Operational improvement, which is genuinely hard and slow work, was replaced by financial engineering, which is fast, scalable, and looks great in a deck. Dividend recapitalizations. Aggressive leverage. Value extraction packaged as value creation.

The shift from traditional software to Software as a Service made all of this look not just acceptable but smart. SaaS came with a beautiful story: recurring revenue, predictable retention, and the appearance of a moat. For capital, it was an almost irresistible barrier to entry and a model for the next five years.

But SaaS contains a paradox that becomes inescapable at scale. Once a product reaches a certain level of adoption, you cannot grow the same way you did on the way up. The category fills in. The only remaining lever is to charge more for the same service, same code, same features, same value, to the customers you already have. The story of growth quietly becomes the story of price.

Pair that with compressed hold periods, and you get an artificial calendar that more or less writes itself. Buy. Push price. Cut where you can. Hit the number. Exit before the math catches up. Value created from extraction, not for longevity.

The result is a market that calls itself private equity but, in many corners, now behaves more like a late-stage venture with more leverage and shorter patience. The vocabulary stayed the same. The results changed.

The Consequences for Technology and Open Source

This matters everywhere, but it matters most in technology, and most acutely in open source.

Technology companies depend on long-term R&D in a way that very few other industries do. Strip that out to hit an EBITDA target storyline for a fixed exit date, and you hollow out what made the company defensible in the first place.

Open source is even more sensitive. The projects and the companies that steward them operate on timelines that are simply incompatible with quick flips. Communities take years to build trust. Maintainers do not respond well to being treated as cost centers. And the moment a stewarding company must choose between mission and extraction, the talent that made it valuable starts looking for the exit.

I have seen this happen over and over again, especially with open-source projects and the companies that depend on them. They struggle to maintain that balance. Many efforts feel genuine. Others feel like open-washing. Most eventually succumb to the pressure, one way or the other. I am not pointing fingers at these companies. They become victims of their own success, and of the structural pressures that come with it. A few years later, no one can quite recognize them, aside from the damage done to the open-source ecosystem.

This is not what private equity was supposed to do.

A Moment of Uncomfortable Honesty

I want to be careful here, because I don't think the answer is to demonize an entire asset class.

I should also be honest about where I'm coming from. About eighteen months ago, I helped introduce an open-source effort that has since attracted more press than I bargained for. Some of it generous, some of it less so, and some where I was demonized and lauded in the same week, occasionally by the same publication. I've taken it on the chin because what I actually care about hasn't changed: the open web, and the principles of open source as a way to build durable things. A great deal of that work happens without anyone getting paid for it, and it should. But the open source that the enterprise actually depends on has to be backed by serious commercial capital, or it doesn't reach the enterprise at all. I am genuinely trying to find a way for private equity and open source to both win. Not one at the expense of the other. Both.

So. Back to the asset class.

Plenty of PE firms still do real work. The problem isn't that PE exists; it's that the playbook that defined PE for decades has become hard to find precisely where it's needed most.

Private equity is not absent from open source. Quite the opposite. Many of the companies behind the leading open-source projects and many of the technology companies that depend most heavily on open source already have PE on their cap tables. The question is not whether private equity is in open source. The question is which playbook those firms are running.

Dries Buytaert makes the parallel point about government funding that it should reinforce the open-source ecosystem rather than control it. Private capital owes the same restraint. The patience I am asking for has to be the kind that strengthens a company without capturing what it stewards.

I am not here to name companies, nor to assume the worst. In an industry that has watched compressed hold periods and SaaS price hikes become the default, it is fair to ask whether the capital sitting in open source today is playing the long game or quietly preparing for a quick flip.

The honest answer in many cases is that we do not yet know. The hold has not played out. The fork in the road is still ahead.

That is precisely why this conversation matters now, and why I think it is more hopeful than the headlines suggest.

Why the Renaissance Is Coming

Here is what I think the smartest capital is starting to figure out. You can already see it at the edges of the market. Joost & Marieke at Emilia Capital have spent years backing open-source, sustainable, and founder-led companies on exactly the thesis I am describing. The vehicle is smaller and at an earlier stage than the PE we have been talking about. The instinct is the same.

Open source is not a hypothetical thesis. The proven outcomes date back to the late 1990s and span nearly every part of the modern stack. IBM's acquisition of Red Hat is the obvious headline; the deeper story is the lineage of serious open source businesses that have quietly built durable enterprise value alongside it. They built companies with real revenue, defensible positions, mission-driven teams, and the kind of slow-compounding moats that traditional PE was originally built to recognize and strengthen.

The strategic backdrop is now reinforcing that fit, and quickly.

A Renaissance Worth Funding

So who actually carries this forward?

Two audiences, with two slightly different versions of the same opportunity.

The firms already invested in open-source businesses have a choice before them that most of the market does not. They can run the calendar, hit the number, exit, and leave a weaker company behind. Or they can do something that forty years of PE history all suggest is the better trade: hold longer, invest in the craft, strengthen the underlying companies, take their returns out of actual cash flow, and let the compounding actually compound. One path is crowded. The other is almost empty. That is what makes it interesting.

In Europe, digital sovereignty has moved from a policy paper to a procurement requirement. In North America, the conversation goes by a different name (digital independence), but the substance is the same. Large enterprises are no longer willing to depend on infrastructure they don't control, and the only way to truly own a technology roadmap is to build it on a foundation you actually own. That foundation, almost without exception, is open source. The point is not that open source replaces the rest of the enterprise stack; it sits at the center as the hub, with the SaaS tools, data services, and AI layer hanging off it. Vendors come and go around it. The data, the workflows, and the roadmap stay with the enterprise.

Layer generative AI on top of that, and the case sharpens further. AI is the largest value uplift to the technology stack in a generation, and almost every meaningful application of it runs on, around, or alongside open source. The companies that steward those foundations are sitting underneath the most important enterprise spend of the next decade. The firms that have not yet invested have an even cleaner version of the same opportunity. The companies are there. The communities are there. The strategic premium on open source is rising, not falling. Patient, operationally serious capital will find very little competition and a very long runway.

There is a reinforcing dynamic here that the procurement conversation has been quietly building toward. Dries and Joost have both argued that public procurement should reward vendors who contribute upstream, not just vendors who ship open source. That changes the math for which kind of capital wins enterprise contracts. Quick-flip operators do not contribute; the cost-benefit does not work on a short hold. Long-hold operators can. Procurement reform, if it happens, does not just fund the commons. It tilts the playing field toward the kind of patient capital this article is asking for.

This is what an open source renaissance actually looks like in financial terms. This is not charity, or impact investing dressed up in fund terms. This is the original PE playbook applied where it is most needed and where, I suspect, the returns will be better than most of what is happening in the crowded parts of the market. The artificial timer is exactly what this opportunity does not need. It needs a market in which patient capital is rewarded for behaving like patient capital, and in which the open web becomes stronger, more independent, and more durable as a direct consequence of that work. The financial case and the mission case point to the same destination. That is the rare situation worth taking seriously.

The PE firms that take pride in operational excellence and understand patience as a discipline are still out there.

The opportunity is real. The companies are there. The communities are waiting. The Renaissance is available to whoever is willing to fund it, like a craft, rather than time it, like a trade.

Joost is asking the policy world to fund the commons. I am asking the capital world to remember how it used to fund the companies. Both halves of that funding stack have to show up.