Understanding open source funding: how investors like Leonid Radvinsky are helping the movement

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Leonid Radvinsky believes that open source software is the key to providing accessible technology to developers all over the world. These projects are maintained by a global network of contributing developers, and anyone interested can contribute to these technologies and use them in their projects at no cost.

Open source software is the foundation of a vibrant developer community, but it cannot be entirely fueled by passion. Developer time is a valuable resource, and contributors to open source software deserve to be paid for the work. Since open source software is available for free, people are understandably curious about how these projects are funded. Luckily, there are several funding options that open source projects can benefit from. Investors like Leonid Radvinsky are helping the open source movement by providing funding and encouraging widespread adoption of the technologies.

How Are Open Source Projects Funded?

Open source technology is primarily given away for free, so the conversion rate from users to paid customers is lower than with proprietary software. As a result, in order for open source projects to earn money, they typically must first gain widespread adoption. Docker, for example, is an open source technology standard for container deployment. Because of Docker’s widespread usage and popularity, people frequently use their service products for their deployment needs. As open source projects gain broad adoption, there are many funding opportunities that these projects can pursue.

Donations, Investments, and Sponsorships

Donors, investors, and corporate sponsors are some of the most common forms of funding for open source projects. Software groups like Free Software Foundation, Software for the Public Interest, Software Freedom Conservancy, and Apache Foundation are funded by these means..

Other projects rely on larger sources of funding from corporate sponsors or venture capital investors like Leonid Radvinsky. Linux, for example, often collaborates with companies that want their hardware to be compatible with the platform. Additionally, Android was made open source by Google as a way to drive traffic to the platform, while Ruby on Rails was supported by Apple.

Consulting, Support, and Training

Open source projects often receive funding by providing services like consulting, support, and training to users. By providing consulting services, open source companies can introduce customers to innovative ways of enhancing their businesses using the software. Through support and training services, open source companies can also help these companies incorporate the software into their businesses.

A well-known example of an open source business that follows this model is RedHat, a company with a valuation of $10 billion that contributes to Linux, cloud, container, and Kubernetes technologies. RedHat offers a variety of support services such as deployment and integration support, training sessions, and prioritized bug fixes.

Software as a Service and Hosting

Although open source software itself is intended to be free to use, companies using open source software can also produce a variety of products to simplify the use of the open source technology. For example, companies often offer fully managed versions of the software with managed hosting. These services can be especially useful for customers that don’t want to handle their own servers or deal with the technicalities of maintenance and deployments.

One popular company following this model is WordPress.com. This site is run by Automattic, the primary contributor to the open source project WordPress.  This site offers blog hosting as well as other services such as domain names and custom website design. This business structure allows Automattic to contribute to the open source model of WordPress, while still generating profit from their own services. GitHub is another company that relies on this cloud model of funding. Although GitHub is not the developer behind git, it provides free hosting for git repositories and an easy-to-use web interface, with upgraded features at a cost for enterprise customers.

Open-Core and Hybrid Licensing

Open-core and hybrid licensing both follow a business model where the majority of the code base is open source while a smaller portion, typically aimed at production or enterprise users, is proprietary.  With open-core software, the proprietary software is maintained separately from the open source software, while with hybrid licensing, the open-source and proprietary code exists in a single repository with some proprietary features locked behind a licensing key.

Hybrid licensing is the newer option and is becoming an increasingly popular way to fund open source technology. Compared to the open-core approach, hybrid licensing makes code maintenance easier since all of the code for the project is contained in a single repository. By following this approach, users can contribute to the proprietary code as needed, and the open source company can still benefit from a source of steady funding by selling proprietary code licenses.  With both open-core and hybrid licensing, companies must balance how much code is open source and how much is proprietary, therefore making too much software proprietary will decrease open source adoption, but making too little proprietary will result in fewer customers.

How Is Leo Radvinsky Investing in Open Source?

Although there are numerous options for funding open source projects, Leo Radvinsky and other investors are helping to promote the open source community by contributing funding and other resources to open source projects. As a technology entrepreneur and venture capital investor, Leo Radvinsky supports the continued growth of these projects. To promote these projects, he has adopted open source projects like Elixir as the technology standard for many projects and has also invested in other technologies like B4X.

Elixir

Elixir is an open source programming language designed to provide developers with robust, scalable solutions for creating decentralized architecture. This technology is in use across a wide variety of industries and is especially popular for building scalable web communities.

To show his support for the language, Leo Radvinsky was a platinum sponsor for the Elixir Conference in 2019. Radvinsky also uses Elixir as the technology standard in his projects and encourages others to do the same. Because widespread adoption of open source technology requires an active community of developers to use that technology, Leo has funded the development and creation of applications built using Elixir. Through this investment, Leo has helped the community of developers contributing to Elixir continue to grow.

B4X

B4X is an open source programming language and a suite of interactive development tools that are designed to simplify cross-platform development. By using these development tools, developers can easily compile their code to create native applications on various platforms without having to implement multiple versions of the software.

When Leo Radvinsky first became involved with the B4X project, it was proprietary software with a small user base, but following his investment, he was able to push for the project to become open source. Today, B4X has a rapidly growing community of developers surrounding it. Through his contributions to the project, Leo has also helped shape the project’s vision to emphasize the value of B4X as an educational tool and allowed for the advancement of the technology through his funding.