Expert opinions, TECHNOLOGY

Funding opportunities for open source projects in Russia and around the world

The market for software distributed with its source code available for use and modification is booming around in the world; in Russia, its popularity continues to grow in the context of import substitution. How can this activity be stimulated financially?

The open source boom

The number of GitHub users has grown from 500K in 2010 to 103 mln. The number of projects (repositories) grew at an even higher rate, from 600K to 359 mln. Investment in open source products has almost tripled, from 58 project financing deals in 2015 to 144 in 2021.

At the same time, the average number of users per repository has dropped from 0.8 to 0.3. This means that the competition for GitHub stars (the project rating system) is now higher than ever. Judging by these statistics, the global open source market is now at its peak.

Nevertheless, the open source model remains within its niche. There are 25-30 mln software developers in the world. Even though productivity in this industry is much higher than in many others, it remains only a fraction of other major markets, such as finance or retail.

Moreover, the monetization of products for developers is still an open question.

Open source funding in the West: A history

There were several important milestones the Western economies passed in stimulating open source project development. In the beginning, the open source model was more about personal satisfaction and practical benefits of working together and sharing code. Contributors often had some informal financial support from universities or research organizations, which provided their employees with time and resources to work on open source software. At that time, the foundations were laid for major projects such as GNU and Linux.

As open source gained popularity and influence, businesses were increasingly viewing it as an opportunity to enhance their products and technologies. Some companies started financially backing individual projects or developers, recognizing it as an investment in improving the tools and technologies they rely on.

Moreover, specialized funds and organizations emerged to support open source software projects. Examples include the Apache Software Foundation, Linux Foundation, and Free Software Foundation. These entities started offering grants, organizing fundraisers, and providing legal assistance to projects.

In recent years, the emergence of crowdfunding platforms like Kickstarter and subscription platforms such as Patreon and Open Collective has allowed developers to seek direct financial support from the community. This approach has enabled numerous projects to thrive and grow through funding directly from their users and supporters.

Additionally, major tech companies like Google, Microsoft, and IBM have played a significant role in funding open source initiatives. They have initiated their own open source projects, invested in existing ones, and offered development infrastructure. This not only bolsters the open source ecosystem but also facilitates the adoption of standards and innovations aligned with their business objectives.

Financial backing for open source projects has shifted from informal and individual contributions to more organized and large-scale forms of sponsorship and investment. This encompasses direct funding from both corporations and individuals, as well as various types of grants, crowdfunding, and assistance from specialized foundations and organizations.

In Western circles, there is ongoing discourse surrounding open source financing, particularly within the framework of COSS (commercial open source software). This underscores the significance of such support for the technology sector. However, companies encounter challenges when seeking to invest in open source projects, primarily due to the absence of formal agreements and the dispersed nature of participants in these projects on a global scale.

A proposed solution to these challenges involves the establishment of funds for open source, enabling large companies to streamline the funding process by making one-time substantial contributions, which are then allocated among projects. This streamlines the process for corporations, reducing red tape and facilitating engagement with various open source software initiatives.

An illustrative example of this approach is Google’s Fund for Web Frameworks and Tools, which is investing in 17 open source software projects. This showcases the effectiveness and advantages of such a support model. Similarly, Open Collective underscores its objective of simplifying corporate backing for open source software by directing funds towards projects crucial to the overall health of the open source software ecosystem.

Our own path: Market run by the government’s visible hand

In Russia, financing is essential for open source projects advancement as well. The government could play a vital role in this process by offering grants and support through public-private financing of specific projects as well as general initiatives in the IT industry.

Yet, this is not the government’s key role as regards the specifics of open source software.

Direct financial support from the state requires analyzing available experience in issuing grants and financial support programs to spot their vulnerabilities and adapt approaches to open source software features. Efforts to attract private capital through government programs play a pivotal role as well.

Yet, only private investment could become a comprehensive driver of development and innovation for open source technologies; they can make relations with private foundations easier to launch, develop and maintain. With available assets, open source software should become an efficient market to attract private investors. Importantly, the government, along with providing direct financial support, should create favorable conditions for open source software development including legal framework, infrastructure, and mechanisms for project monitoring and support.

Altogether, this will provide the private sector with opportunities for projects monetization and return on investment, which could increase the willingness to finance developments.

Initial efforts should include establishing a legal framework that would promote the development and application of open source technologies. In this regard, the initiative should come from related associations, which will collaborate with businesses and formulate proposals for further work on bills in working groups.

It is important to consider that international rules for open source software distribution, such as GPL, are not always fully applicable in Russia, hence the urgent need for developing locally specific requirements and standards.

Infrastructure development includes building national repositories for project storage and access to provide necessary support for developers and facilitate collaborative efforts. This is a task for public and private institutions that promote open source technology development.

Developers should also engage in building and maintaining their own repositories and make their contribution to creating Russia’s diverse and expansive open source ecosystem.

Change is possible: today, we can see seemingly non-core players involved in developing the most substantial IT products. Examples include Rostelecom, which has recently introduced its own hypervisor, something that seemed simply unthinkable five years ago. This happened due to an emerging demand, available legal framework for licensing, and an executive order issued on prohibiting the use of foreign solutions in this category – and things got underway.  

Looks like an obviously visible hand of the market and the government.

By Vyacheslav Volodkovich, General Director, Aerodisk

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