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Measuring open source traction
At Oxx, we’re focused on partnering with the best scaling software teams.
Working with open source driven software companies presents a unique challenge though: how as an investor do you evaluate the pre-financial traction of an open source software project? How can one measure the activity of a community – the leading indicator of the explosive growth that open source projects can achieve?
The simplest answer would be the surface-level information readily available from the open source repos themselves: stars, forks, watchers and downloads. These metrics are often correlated with community activity, and they demonstrate some level of awareness of a project, but they don’t get to the heart of the unit of community activity: the engaged contributor.
That’s why in 2021 we shared a methodology for measuring not just awareness but of engagement with an open source project - a way of tracking "product community fit".
Rather than focus on surface level metrics, we reviewed repo logs for specific projects themselves and identified specific contributors and their activities. By looking at the engagement levels of these contributors over time, we could build a quantitative picture of the growth in engagement. We could identify the rising stars of the open source software landscape.
2021 Rising Stars of OSS: where are they now?
Having backtested our methodology for measuring open source traction on over 175,000 projects, over 15 years of historical engagement data, we developed a clear view on the leading indicators of open source growth.
Historical data taught us that projects with accelerating engagement levels, entering the 50-100 active contributors “zone” would be highly likely to commercialise successfully, and to continue to scale.
Given that benchmark, we applied our methodology to the 2021 open source software landscape and identified the 20 highest potential projects: communities where we could measure rapid acceleration in engagement levels, entering that magic “product community fit” zone where projects demonstrate long-term, global potential.
In hindsight, the 2021 Rising Stars of OSS cohort contained some fantastic early stage businesses.
At Oxx, we have been fortunate enough to partner with one such business, Gravitee, and many of the other members of the cohort raised significant capital from top-tier global software investors Benchmark, Index, Accel, Sequoia and many others.
60% of the cohort went on to raise growth equity capital in some form, and three members of the group have since become unicorns. In total, funds raised by the 2021 cohort following its formation were approximately $750m: an amount of capital that reflects the huge, global prize that each business is competing to win.
2022 Rising Stars of OSS
With 2021 in the history books, the time has come for a fresh generation of open source rising stars.
As with previous cohorts, we have reviewed the activity logs for the universe of repos, and identified those entering the product community fit zone with the greatest momentum. From our perspective, these projects represent some of the most exciting, high-momentum opportunities for software investors today.
We can’t wait to see what this cohort of projects will achieve in the rest of 2022 and beyond.
One of them (perhaps even several of them) could change the way that software is developed globally for years to come!
Get in touch!
I’m always happy to discuss open source software. If you’d like to connect, drop me an email at bt@oxx.vc
