How to Find The Right Sponsors for Your Open Source Project

The ongoing maintenance and growth of open source projects are clearly in the best interest of the software companies using them. And yet, raising money for an open-source project is difficult, and many developers struggle with finding the right sponsors for their projects. What is the best way to get the resources open source developers need to keep developing?

Boiling point

The open-source sustainability problem has become a burning issue for both OSS developers and software companies. We are reaching a boiling point; Open source components already comprise 70% of code in most software products developed today, and they are maintained by individuals or small teams. These developers work out of their own volition, and without getting the much-needed resources, they just won’t be able to continue maintaining their code on an ongoing basis.

We participated in Sustain OSS in Brussels this January, together with a very respectable representation of software companies (Github, Google, Facebook and more, who sponsor open source projects in millions of dollars every year). Senior developers and leaders of the open source community from across the globe also attended. It was amazing to see more than 100 people in the same room, working in work-groups and sharing their ideas and thoughts, trying to solve the open source sustainability problem. There was a sense of urgency in the room. People felt like this problem has become something that needs addressing - now.

Why do companies sponsor OSS projects?

During the conference, we tried to understand why it’s so hard to get donations or sponsorship for open source projects. To do that, we tried to understand the sponsor’s motivation. The main question was: Why do companies sponsor OS projects? The surprising answer was: marketing. We thought that companies usually sponsor projects they use, to support the developers behind them, and get better-maintained code. But sometimes, the motivation is not technical. Software companies we’ve spoken to, agreed they usually sponsor projects for marketing and branding reasons, as well as for providing general community support. For some, it helps with developer recruiting efforts. For others, it’s a way to position the company as an innovative or a leader in a certain domain. The budget for donations or sponsorship for open source projects, it appears, is often taken from the marketing budget, not the R&D budget as one might expect. True, many open source projects also get donations from individuals, but many times these do not accumulate to a critical mass to provide a substantial revenue stream developers can rely on. Most projects are not big enough, popular enough and well-known enough to appeal to companies that donate substantial amounts. Even very popular, heavily sponsored projects can sometimes struggle with getting re-sponsored and need more ways of generating revenue.

The perfect sponsor is a paying client

Sponsorship and donations are an amazing way the software industry gives back to the open-source community. The people behind Open collective and Github sponsors are doing incredible work, and more and more projects are getting much needed financial support by using them. But if sponsorship and donations are out of reach, or not enough for some projects - there has to be another way for developers to get the financial resources they need to continue developing.

Marketing aside, software companies have a direct incentive to support open source developers. We just need to define a structured way for both parties to work together.

Companies already have a relationship with open source developers - they are using the developers’ code in their commercial software projects. But that is a one-sided relationship. It needs to become a two-sided relationship, and the way to do that, we believe, is by allowing developers to offer paid products and services on top of their free and open source code. The code should remain free, but by allowing developers to offer paid items like support, bug fixing, premium code versions or commercial licensing - we create a win-win, 2 sided relationship.

Companies win, because, for the first time, they will actually have the ability to communicate with OSS developers and get the support they need for the open source components they use. The motivation becomes tangible. It extends beyond voluntary financial support, to direct and clear value they are getting for their money.

Developers win because they can start generating revenue with their open-source projects, without relying solely on donations or sponsorship. It can happen as a side-gig or a full-time thing. It’s entirely up to the developers to choose what, how and when they offer their services and products.

Friction points 

Paid services and products on top of a free open-source code are not new. Huge companies formed around successful open source projects like Redhat, Mongo, Redis, and others, have created a market projected to reach $32Bn by 2023. If it’s working for big companies, why not for individual developers?

The reason is the one-sided relationship mentioned earlier. In order to establish a two-sided financial relationship, we need to address several friction points that stop them from forming today:

• Payment - Developers need a way to charge money from companies without needing to incorporate or handle finances, taxes and other corporate nightmares.
• Legal -  A structured legal framework is required to define the relationship.
• Communication - A simple way is needed to facilitate communication between parties.
• Structured offering - Developers need a way to offer structured and measurable paid items, so companies know what they are paying for.
• Trust - A trusted 3rd party is needed to provide oversight and protection to both parties.

These friction points became clearer, after a survey we did at FOSDEM  (The largest OSS conference in Europe) last February. From just over 150 developers we’ve spoken to, 25% have been requested to offer paid services, code versions or licenses, by companies that were using their code. From those 25%, only a fraction were actually able to provide a service and get paid  - due to one or more of the friction points mentioned above.

What’s next

These learnings took us back to the drawing board, challenged and excited than ever. We’re working closely with community leaders and software companies to create a free platform that removes the friction points mentioned above, and allows companies to buy support, code or licensing from the developers who create the code they are using. More than 300 developers have already signed up, offering a variety of products and services with their free code.

We are super excited to work on creating a new open source economy based on trust, transparency, and collaboration - as an extension of donations and sponsorship. Making sure open source developers get the resources they need is in the best interest of anyone developing software.

Our beta is now open for everyone. We would love to hear your thoughts and feedback at: [email protected]

Netanel Mohoni, Founder & CEO
Chen Ravid, Founder & Head of product

Previously published at https://xscode.com/736/the-right-sponsor-for-your-open-source-project/