Introduction to the Rising Stars

Open Source companies operate in a unique ecosystem characterised by open collaboration, community involvement, and diverse revenue models. The open source approach to software development and business differs from companies that rely on proprietary software licensing models, and therefore working with such companies presents a unique challenge. These businesses often commercialise only when a product is more mature, already has significant user adoption and traction from an open source community of contributors and users.

So, as an investor, is it possible to evaluate the pre-financial traction of these open source software projects? How can one measure the activity of a community – the leading indicator of the explosive growth that open source projects can achieve?

Each year, Oxx analyses the open source landscape, to identify which businesses in the open source ecosystem show signs of becoming successful, sustainable companies. We have developed a methodology that combines both awareness and engagement metrics for open source projects and allows us to identify high-potential projects before they reach significant scale. We look at “ProductCommunity Fit”, measuring the active contributor base of a project as an indicator of engagement and future fundraising potential, resulting in our mapping of the “Rising Stars of OpenSource”. Since we first ran this analysis in 2021, the companies identified have raised >$1.5bn of venture capital.

Highlights

37

companies

4-5

minted unicorns & several “soonicorns”

>$1.5bn

in raised capital

Succeeding in Open Source: Finding Product Community Fit

Entrepreneurs and investors will be familiar with the concepts of Product Market Fit (PMF), and more recently, Go-to-Market Fit (GTMF). However, because open source companies often reach significant levels of product maturity before commercialising, they can achieve strong product market fit with fewer outward signs of GTMF. So how can we measure the latent potential for GTMF in these pre-commercial (or early commercial)projects?

Successful open source companies excel in building strong communities, providing value-added services, and striking a balance between “building in the open” and “revenue generation and moat”. So for open source companies, we are suggesting a new leading indicator of commercial potential based on the activity of its community: this is the concept ofProduct Community Fit (PCF).

Product Community Fit is all about the harmony between a product and the people who use it, contribute to it, and shape its evolution. Think of it as a close connection between a product and its community of users and contributors. For open source projects, this community is often the market itself. The key here is that the open source project develops in a way that aligns seamlessly with what the community and therefore potential customers need and desire.

One way we gauge Product Community Fit is by measuring the growth in a project’s active contributor base. This metric tells us how engaged the community is in actively developing and moulding the product, and how quickly that community is growing. More active involvement suggests a stronger fit. On platforms like GitHub, activities such as code commits and addressing issues demonstrate that people aren’t just casual observers of a repo; they are genuinely invested in the project’s growth.

Why is this so important? Well, Product Community Fit serves as a leading indicator of future success. An active and committed community not only spreads awareness but also provides valuable feedback, helps fix bugs, and contributes new features. This support is invaluable and paves the way for commercialisation and fundraising. In essence, the community is a prerequisite to success in open source, and Product Community Fit isa more predictive metric of open source longevity because it captures the essence of market and community alignment.

When we focus on Product CommunityFit, we can identify projects with momentum. This momentum not only highlights their present success in engaging a community but at certain levels can be a good indicator of future commercial viability.

Levels of engagement: Understanding the GitHub metrics

How can you tell if a company hasachieved Product Community FIt?Oxx’s methodology is based on ananalysis of public repositoryinformation from Github. As theleading platform for version control,collaboration, and hosting for opensource software repositories, allowingdevelopers to work together on codeprojects, Github’s public data 

archives and APIs are a great source of open source data. The platform provides several engagement metrics that can help users gauge the activity and popularity of repositories and projects. These metrics are intended to give insight into how active and well-received a repository is within the GitHub community, and provide a high level view of a project’s traction:

When evaluating a company forProduct Community Fit there are multiple layers to look at, and it’s essential to distinguish between top-level metrics and more meaningful indicators that provide a clearer picture of a project’s health and potential. Put simply, some metrics measure awareness, and others active engagement. It is the active engagement that is relevant when evaluating Product Community Fit. 

There are limitations of certain commonly used higher level metrics, which are outlined below. 

The top level metrics described earlier can be misleading for several reasons.They are susceptible to manipulation and may not accurately represent the true level of community engagement or the project’s fit within its user base. Moreover, these metrics are often lagging indicators, taking time to accumulate even when there’s a lack of real engagement. They are quantitative in nature and do not capture the qualitative aspects of the community’s motivation and commitment. So while these top-level metrics may offer a superficial impression of a project’s popularity, they do not reliably indicate its actual adoption, fit with user needs, or the depth of community involvement.

To assess Product Community Fit effectively, it is necessary to look beyond these metrics and focus on more meaningful indicators that reflect active participation, collaboration, and alignment between the project and its community. Oxx does this by leveraging GitHub’s public events database to analyse contributor activities, including commits, issues, comments, and pull requests. This approach, which focuses on “monthly active contributors” – users actively involved in committing code, raising issues, commenting on discussions, or making pull requests within the past month, offers a more refined measure of monthly engagement while effectively filtering out inactive or casual users.

By emphasising direct contributions and qualitative commitment, this metric not only resists manipulation but also better reflects the community’s motivation, buy-in, and its potential to drive adoption and shape the project’s future. Tracking monthly active contributors based on contribution activities provides a more predictive and dependable measure of open source community engagement and fit.

Methodology

Having backtested our methodology for measuring open source traction on over 175,000 projects, over 15 years of historical engagement data, we have developed a clear view on the leading indicators of open source growth with the concept of Product Community Fit. Historical data shows that projects with accelerating engagement levels, entering the 50-100 active creators“zone” would have the best potential to commercialise successfully, and to continue to scale.

Identifying the rising stars of open source involves analysis of second order GitHub data (as described earlier), to assess activity and engagement over time. Using theGitHub API, we enrich the Github Archive data with additional details such as repository descriptions, programming languages, locations of contributors etc.
The enriched repository data is subsequently used to filter and analyse projects based on predefined Product Community Fit criteria, such as having 20 to 200monthly active contributors, showing rapid month-over-month growth, and exhibiting other engagement signals and metrics. Projects are monitored over time to identify trends in surging engagement and trajectory. Once the analysis is concluded, we select the annual emerging stars cohort.

This approach forms the core of the data-driven approach to open source discovery.

Evaluating the 2021-22 cohorts: Where are they now?

Since 2021, we have conducted an annual analysis of open source projects and released our findings on the “rising stars” each year: the projects at early stages of commercialisation with the highest levels of open source community traction. So, what has happened to the previous cohorts of identified rising stars?

In aggregate, the 2021 and 2022 cohorts have raised more than $1.5bn in venture capital, and have produced a number of unicorn companies. Several are also “soonicorns”, that is, well on their way to achieve unicorn valuations.

Mapping the capital raised by the companies in the 2021-2022 cohorts, the data shows that our methodology has highlighted several open source projects poised for growth and investment. A handful have gone further and emerged as global high-flyers with over $100m raised.

N.b. the categorisation is based on Oxx estimates, based on growth capital raised.

The companies of the 2021 cohort

The companies of the 2022 cohort

Spotlight: Standouts from 2021 & 2022

The emergence of AI influencers

One of the standout trends in the open-source landscape for 2023 is the rise of AI technologies globally. Significant developments in generative technology, LLMs and agents has led to high adoptability for bleeding-edge projects that experiment with these technologies, and in turn, the rise of“AI influencers” on GitHub. Figures likeHarrison Chase and Georgi Gerganov, among many others, have started projects which garnered massive traction within the GitHub ecosystem, (Langchain as one example, experiencing a staggering growth rate of over 6000% in engagement over just six months, and becoming the defacto agent standard for AI applications). This remarkable surge in popularity underscores the significant impact AI-powered developer personalities can have within a very short space of time.

The surge in creator engagement around these AI influencers serves asa compelling indicator that this trend isnot only noteworthy but also indicative of the shifting dynamics in the open-source world. As AI technology continues to advance, its capacity to generate code and engage meaningfully in open source communities is rapidly improving. AI influencers are developing projects towards a potential future in which AI developers collaborate seamlessly with human counterparts in open source endeavours – MetaGPT, AutoGPT and others have been early movements in this domain.

The companies of the 2023 cohort

Summary

We have high hopes for the 2023 cohort as they bring a new generation of fundamental technologies to market.They target thematically relevant areas for 2023 particularly, as we see the paradigm shift in database development, applications and AI tooling.

While the 2023 capital markets outlook might present a tougher backdrop for financing, the quality of products, community engagement levels and

attractiveness of end-markets should give these companies the edge over others when it comes to growth. Their open source foundations also provide the opportunity to attract and recruit the most talented developers –interested in solving some of the biggest problems in B2B software today – to their cause. We’re already looking forward to 2024 and updating you on their progress!