Serena study shows Open Source beats proprietary in funding speed, valuation, and exit success

A 25-year study by Matthieu Lavergne, Partner at Serena, sheds new light on a long-debated but unresolved question in tech: do open source companies truly outperform their proprietary peers? 

Based on 25 years of venture capital data (2000–2024) and an analysis of over 800 VC-backed Open Source companies, the Serena VC Commercial Open Source Report) provides valuable insights into the financial dynamics of this model.

Here are some of the key findings: 

Open Source emerges as a leading investment category

Open source has established itself as a recognised investment category, with an average of 250 funding rounds per year and $9 billion in annual investments since 2019.

2024 marked a historic acceleration: 211 deals raised $26.4 billion for COSS companies, accounting for 5 per cent of total VC investments in software. This momentum was driven by record-breaking funding rounds, including Databricks ($9.5 billion), xAI ($11 billion across two rounds), and Mistral AI ($600 million in Series A).

While the US remains the primary hub for VC-backed open source companies (65 per cent), Europe is catching up, now representing 20 per cent of COSS companies. Local leaders include  Aiven, BrowserStack, and Odoo.

Open source companies raise faster and at higher valuations

The research finds that open source companies are 20 percent faster at raising a Series A and 34 percent faster at reaching Series B. They raise 1.45x higher at Seed and 1.33x higher at Series A.

Further, stronger graduation rates between funding stages: 91 per cent of open source startups move from Seed to Series A (vs 48 per cent for software overall), and 88 per cent progress from Series A to Series B.

However, the data challenge the assumption that GitHub community engagement directly impacts fundraising success: GitHub star count has minimal influence on valuation or round size, except in specific segments like DevOps tools and Data platforms.

Open source companies deliver superior returns to shareholders

According to the study, open source companies achieve significantly higher valuations than proprietary companies at IPOs and acquisitions.

Notably, 12 per cent of VC-backed open source companies have successfully exited through M&A or IPO.

At IPO, Open Source companies have a median valuation of $1.3 billion, compared to just $171 million for proprietary software firms. 

Further, In M&A deals, the median valuation for COSS companies is $482 million, versus only $34 million for proprietary firms.

The impact of open source software goes beyond business models, serving as a catalyst for innovation through global collaboration and modular reuse, a foundation for trust through transparency and community governance, and a tool for digital sovereignty as countries and companies seek control over their tech stacks and independence from closed platforms.

Matthieu Lavergne serves on the boards of several open source companies, including Pyannote AI (AI), Opsmill (Infrastructure), Kotzilla (DevTools), and Switstack (payments). He has been an active GitHub user since 2013. 

He shared: 

“This report responds to a widely debated but unresolved question in technology—one that is growing in importance as nations and organisations seek greater sovereignty, trust, and innovation.

Commercial open source software has proved to be the winning strategy for startups, entrepreneurs and investors.”