Computergram: Collab.Net Funding Validates Open Source Exchange Model

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From: Sally Khudairi (
Date: Tue Jun 06 2000 - 08:51:22 PDT



Collab.Net Funding Validates Open Source Exchange Model

Section: 01. Top Stories
By Stephen Phillips

A roll call of the IT industry's biggest names climbed aboard internet-based
open source software development forum Collab.Net, yesterday, bankrolling a
$35m funding round that hands the open source development model one of its
most powerful votes of confidence to date.

San Francisco, California-based Collab.Net announced funding from Dell,
Hewlett-Packard, Intel, Novell, Oracle and Sun, among other hardware and
software vendors, for what is its second cash injection since starting up ten
months ago. Bernie Mills, vice-president, marketing, said industry firms,
which typically mount investments in start-ups that they think will advance
their own interests, stumped up more than half of the latest financing. Other
participants included Netscape co-founder Marc Andreesen, who has also taken
a seat on Collab.Net's board, Silicon Valley venture capital firm Benchmark
Capital and San Francisco-based investment bank WR Hambrecht & Co. The
respective stakes bought by the fund-raisers in Collab.Net were not

ComputerWire can also reveal that Collab.Net will go public later today with
a flagship commission from Sun Microsystems Inc for its hosted, managed
collaborative software development environment. Details were still sketchy at
press-time but the contract is believed to be similar to one held by the firm
with HP. Collab.Net scored a contract from HP in January to provide a site
for developers to pool their code-writing efforts using the hardware and
software vendor's "e-speak" internet software protocol.

Commenting on HP's participation in yesterday's funding round, Mike Balma,
Marketing Manager for Open Source and Linux Operations said, "HP believes
that open source development services like those offered by Collab.Net will
be a key factor in expanding the use of open source software in the

"We felt confident in making Collab.Net HP's first open source investment,"
he added.

The firm will plunge its new funding into developing its three
revenue-generating businesses: a web marketplace for developer services,
project hosting and consulting services. Collab.Net's SourceXchange market
presents a platform for businesses to put applications they need built out to
competitive tender to a community of developers. Firms pay a fee to
Collab.Net for access to the mechanism, while "peer reviewers" drawn from the
developers' own ranks are used to help corporate customers evaluate bids.

To date more than 6,600 software developers skilled in C++, Java, Linux and
other programming languages have registered with SourceXchange; while more
than 1,600 have mounted bids for business posted by client firms.
Collab.Net's Mills would not disclose the number of customers, apart from
saying it was more than ten and below 100.

The firm also draws revenue from hosting and managing collaborative web sites
for vendors wanting to stimulate development of applications using their own
protocols, such as HP with e-speak. Collab.Net charges for such services on a
monthly basis. It also earns money from advising firms on software
development models, tools and methodology.

Mills said loss-making Collab.Net, which counts 70 staff, is tentatively
eying an initial public offering (IPO) of shares on the public investment
market next year. It hopes to ring in its first profit two quarters after
going public.

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