In This Article:
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Index Ventures partner Mike Volpi has been investing in open source since it was a contrarian bet.
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He scored big this week with the Elastic IPO, which doubled in its debut, and Hortonworks' merger with competitor Cloudera.
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A venture capital firm solely focused on open-source software start-ups also launched this week.
Mike Volpi of Index Ventures started investing in open-source software companies when it wasn't clear if they could make much money. This past week — more than any before it — has validated his conviction that they can.
On Wednesday, Hortonworks HDP , a big-data software company backed by Volpi, announced that it was merging with competitor Cloudera CLDR . Two days later, another one of Volpi's companies, Elastic ESTC , started trading on the New York Stock Exchange and doubled in value in its debut.
It was a whirlwind few days for Volpi, who left San Francisco early in the week for meetings in London and Paris with Index's limited partners and other investors. On Thursday, shortly after the Cloudera-Hortonworks deal was made public, he flew to New York, where he and other Elastic board members met for three hours to price the software company's IPO and allocate shares.
Finally, on Friday morning, Volpi stopped by Elastic's breakfast at the New York Stock Exchange, where he greeted some of Elastic's 240-person contingent that was in town for bell ringing at the Big Board.
"It was a zoo," Volpi said, in reference to the number of people in the room. "I barely got a coffee in my hand."
He spoke to CNBC in a phone interview on Friday afternoon from the streets of Times Square.
Investors in open source
Volpi is one of the few venture capitalists to make a name investing in open-source software, a difficult task because it often requires that companies successfully commercialize a product that also has a free version customers can use. Another big investor in the space is Benchmark's Peter Fenton, who also backed both Elastic and Hortonworks.
Volpi first poured money in Hortonworks in 2011 and followed by investing in Elastic in 2013. At the time, many of his counterparts in venture were skeptical, but today Elastic is worth close to $5 billion and the combination of Cloudera and Hortonworks is valued at over $5 billion.
Now, Volpi said, the open-source deals are much more competitive. That's to be expected considering Salesforce CRM spent $6.5 billion this year on MuleSoft, and Microsoft MSFT shelled out $1 billion more than that for GitHub. Both were venture-backed open-source companies.