In a world increasingly shaped by innovation, open source has emerged as a powerful force—yet it’s often misunderstood as a business model. Joseph Jacks and OSS Capital are changing that narrative by championing early-stage open source startups, providing them with crucial funding during their formative years. This approach showcases a blend of philanthropy and capitalism, challenging traditional notions of how businesses can thrive.
OSS Capital's investment portfolio features a variety of noteworthy companies, including Formbricks, a compelling alternative to Qualtrics; AppFlowy, rivaling Notion; Plane, taking on Jira; Cal.com, an alternative to Calendly; Hoppscotch, which competes with Postman; and Cerbos, a contender against Okta. Each of these companies not only shares a commitment to open source but also embodies the ongoing tension between the ideals of free access and the necessity of profitability.
“The intriguing aspect of these open source companies is their dual nature—they’re both philanthropic and capitalistic, aiming for sustainable revenue,” Jacks explained in a recent interview. “This paradox exists from inception to maturity.”
At the heart of OSS Capital's investment philosophy lies this compelling duality. Jacks asserts that while open source software thrives on community support and accessibility, it can also drive sustainable business models. "I believe capitalism is the most effective means to foster positive behaviors, and commercial open source startups are ideally positioned to spur innovation in this space," he stated.
Joseph Jacks is no stranger to the open source landscape. He founded Kismatic, one of the first companies built around Kubernetes, which Google launched in 2014. After Kismatic was acquired by Apprenda in 2016, Jacks continued to influence the open source community, establishing KubeCon—a major conference donated to the Cloud Native Computing Foundation.
Following his venture with Kismatic, Jacks co-founded Aljabr, a cloud data management startup. Though it ultimately didn’t succeed, it fueled his passion for open source, leading him to start a blog dedicated to exploring its potential. “The creation of OSS Capital wasn’t a grand scheme; it stemmed from my obsession with open source companies,” Jacks noted. "I didn’t come from a VC background; this was a passion project that turned into a fund."
Since its inception in 2018, OSS Capital has successfully raised three funds, each approximately $50 million, and is gearing up for a fourth by early 2026. While primarily investing in seed-stage companies, OSS Capital has also participated in follow-on funding rounds, including a notable Series A investment in W4 Games, which is commercializing the open source game engine Godot. Their exit strategy has seen successes like Remix, a full-stack web framework acquired by Shopify in mid-2022, yielding a profitable outcome for OSS Capital.
With around 80 investments to date, OSS Capital has built a strong network of limited partners, including influential figures in the open source ecosystem. Notable investors include Automattic CEO Matt Mullenweg, Red Hat co-founder Bob Young, and MongoDB co-founder Eliot Horowitz, among others. This network is invaluable in navigating the complexities of open source investments, with many LPs having deep roots in the industry.
For example, Didier Lopes, co-founder and CEO of OpenBB—an open source alternative to Bloomberg Terminal—secured $8.5 million in a seed round led by OSS Capital just six months after launching his project. Lopes emphasizes the benefits of the partnership: "Their insights helped us balance open source and commercial offerings, and they connected us with key industry leaders."
Yet, the challenge remains: how to maintain a sustainable business within the open source framework. Jacks recognizes the tension between open source as a distribution model and the necessity for a viable business strategy. He explains, “Open source isn’t a business model—it's a licensing and development philosophy. Our goal at OSS Capital is to generate significant returns for our investors.”
As Jacks navigates this evolving landscape, he firmly believes in the potential of the "open core" model. This approach combines open source's transparency with the revenue-generating power of proprietary features. “I predict that open core will outpace traditional closed-source SaaS companies,” he asserted, echoing sentiments shared by other industry leaders like GitLab's CEO Sid Sijbrandij, who believes that the open core model could dominate the venture-funded landscape in the future.
Jacks envisions a future where most startups will find their place within the spectrum of open source and proprietary models, enhancing the value and trust that comes with user contributions. As the landscape continues to evolve, OSS Capital is at the forefront, ready to support the next generation of open source innovators.
Through its unique investment strategy, OSS Capital is not just funding companies; it is fostering a revolution in how we think about open source and its potential to reshape the business landscape.
