On September 13, 2006, John Matthesen of Keiretsu Angel Forum, gave a talk in Mountain View, CA on what makes investors happy when investing in open source software businesses.
Matthesen, a serial entrepreneur and formerly of ByteBlaze, indicated that investors are happy when large companies acquire open source businesses because the angel investor has a shelf life of three years, and wants to receive a return on investments.
In order for a company to be attractive for acquisition, it should be vertically specialized. From the venture capital point of view, the goal is to make money, not to invest in open source. Open source itself is not a business model. Investors look at companies as investments, not whether they are open source providers.
Matthesen noted that not many software companies become the size of Microsoft. Open source businesses allow investors to contribute less money in exchangfe for greater money returns.
Because it is difficult to collect money for open source solutions, liquidity events might result from businesses that are able to create services around the open source offering.
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