Open source wins again: OpDemand closes 3rd seed round

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Published on Apr. 22, 2014
Open source wins again: OpDemand closes 3rd seed round


Boulder-based OpDemand just closed a $900,000 round, which CEO Joshua Schnell described as “a true seed round, involving individuals and angels with a software background that are value-add investors." The round puts the company at about $2.5 million raised in total since the company was founded in 2011 by CTO Gabriel Monroy and Schnell.

This recent funding will help OpDemand's Deis product, an open source application platform, compete in what Schnell calls a “hot space" filled with competition from bigger companies like Cloud Foundry and Red Hat’s OpenShift PaaS. These competing products, though, "are big, beefy applications that can be difficult to install, set up and maintain," Schnell said. Deis, on the other hand, allows software teams to deploy and scale applications in a matter of seconds.

Another example of a successful Colorado open source company, OpDemand demonstrates that, with the right idea, not only can an entrepreneur like Monroy create a product and carve out a niche that will find paying customers and a community of developers to support it, but that investors will help it compete with the biggest names in an industry. Red Hat, in this case, employs 6,100 and had $1.33 billion in revenue in 2013.

Monroy describes their PaaS offering as “a lightweight, easy-to-use alternative to bulky enterprise systems that is heavily based on Docker.” He said that they have a two-fold value proposition: “We offer an agility benefit, where you can play apps in 30 seconds, not hours or a week like traditional means, which provides rapid deployment and enhances developer productivity. We also provide lightweight virtualization, allowing clients to put much more on a server than with other means. That offers an immediate ROI of a 10x efficiency gain, using fewer servers.”

“It’s a private Heroku (a cloud PaaS) that customers can use to run whatever they want, in the cloud, in a data center, for non-cloud applications.”

OpDemand provides its clients with varying levels of service, from installation assistance, starter sessions and discounted professional services; to commercial support and upgrade assistance; to enterprise-class support and guaranteed response times.

“We’re fortunate to have a successful open source project behind us,” Schnell said. “Sometimes a project won’t find much interest. We’ve got a successful and visible project, with more than 1,500 GitHub stars, 98 watchers, 169 forks and nearly 40 contributors. So while we’ve got four people working on the product from our end, we have ten times that many contributing to the project. It’s great for momentum and growth.”

They both encourage those who’d like to look at the project and contribute to do so.

“We have an ‘easy fix’ tag on some open bugs and issues for those who’d like to get their feet wet,” Monroy said. “We have an active IRC channel with lots of discussion, questions and answers, and two GitHub repositories, opdemand/deis and opdemand/deis-cookbook.”

Although the team currently stands at just Monroy, Schnell and two senior software engineers, along with an external maintainer of the project, the funding will help grow the team this year.

“All our projected hires are on the engineering side. Customer growth will drive support needs, so we’re focused on bringing in senior technicians to invest in the technology,” said Schnell.

He notes that OpDemand has paying customers, is actively providing professional services, and is selling subscriptions.

Schnell and Monroy note that their community of open source developers provides the best pool of potential employees, given that they are qualified, interested in the project and can hit the ground running.

“There’s less pressure on us in the interview process to know their skillset,” Monroy said. “That’s just one of many benefits to being an open source project.”

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Information Technology • Internet of Things • Mobile • On-Demand • Software