The significance of startups engaging in the development of open-source software and tools within the burgeoning AI landscape, particularly in the data infrastructure sector, has been underscored by a recent report.
The Runa Open Source Startup (ROSS) Index, an initiative by Runa Capital, a venture capital firm that relocated its headquarters from Silicon Valley to Luxembourg in 2022, has been consistently releasing reports for the past four years. The latest report, focusing on the entirety of 2022, is set to be reiterated for the upcoming year of 2023.
Emerging Patterns
The symbiotic relationship between data and AI is evident, as AI heavily relies on data for learning and forecasting, necessitating robust mechanisms for data collection, storage, and management. These intersecting trends were prominently featured in the report.
LangChain, a San Francisco startup established two years ago, secured the top spot in the ROSS Index last year by introducing an open-source framework for developing applications based on large language models (LLMs). Recently, LangChain’s flagship project garnered 72,500 stars, with Sequoia leading a $25 million Series A funding round into the startup.
Top 10 Commercial Open-Source Software (COSS) Companies in the ROSS Index for 2023 Image Credits: Runa Capital
Additionally, Reaction, a Python-based open-source framework for crafting web applications, and Sismo, an open-source AI chatbot builder similar to an open-source Airtable competitor, have also secured positions in the top 10. HPC-AI is actively developing a distributed AI development and deployment platform, aspiring to become a prominent player akin to OpenAI in Southeast Asia. Furthermore, the open-source vector database Qdrant recently raised $28 million to capitalize on the burgeoning AI wave.
An overview of the “top 50 trending” open-source startups in the previous year revealed that more than half (26) were associated with AI and data infrastructure.
Top 50 Commercial Open-Source Software (COSS) Startups in the ROSS Index for 2023 Image Credits: Runa Capital
Given the dynamic nature of businesses adapting to current trends, comparing the 2023 index with the previous year from a vertical standpoint poses challenges. This fluidity may have prompted early-stage startups to pivot their focus or intensify their emphasis on the existing “AI” component of their products, especially with the surge in ChatGPT’s popularity last year.
With the advent of a breakthrough year for generative AI, the escalating demand for open-source components is foreseeable, as organizations across the spectrum strive to keep pace with proprietary AI giants like OpenAI, Microsoft, and Google.
Geographic Insights
The collaborative nature of open-source software development transcends geographical boundaries, with contributions from developers worldwide. This global ethos is often reflected in commercial open-source startups, which may lack a centralized physical headquarters.
While 10 companies on the list operate internationally with founders or employees dispersed across different regions, the ROSS Index effectively incorporates geographical diversity.
Among the top 50 startups, 17 countries are represented, with 23 companies headquartered in Europe—a 20% surge from the previous year. Notably, Sismo and Massa feature in the top 10, with France hosting the highest number of COSS startups, followed by a notable increase in the United Kingdom from one startup in 2022 to six in 2023, positioning it as the second-highest contributor from a European standpoint.
The report also delves into programming languages, revealing a spectrum of 12 languages utilized by the top 50 startups last year, showcasing an evolution from the 10 languages in 2022. TypeScript, a JavaScript derivative developed by Microsoft, retained its dominance, being employed by 38% of the top 50 startups. Python and Rust witnessed growth in adoption, while Go and JavaScript experienced declines.
ROSS Index: Trending Programming Languages for 2023 Image Credits: Runa Capital
In 2023, the cumulative contributors among the top 50 ROSS Index participants surged by 12,000, with the overall GitHub star count escalating by nearly 500,000. The report further discloses that funding injected into the top 50 COSS startups in the preceding year totaled $513 million, marking a 32% upsurge from 2022 and a notable 145% increase from 2021.
ROSS Index: Contributors, Stars, and Funding for 2023 Image Credits: Runa Capital
Methodology & Context
The determination of what qualifies a company as “top trending” warrants scrutiny of the underlying methodology. To be considered, all companies must amass a minimum of 1,000 GitHub stars, a metric akin to a “like” on social media. Recognizing that star accumulation is a cumulative process, the absolute star count alone may not accurately reflect current trends. Hence, an annualized growth rate (AGR) is employed to gauge the relative increase in stars over a specific period, enabling a comparative analysis of star values between different time frames.
Focused on spotlighting open-source “startups,” the Runa investment team sifts through projects affiliated with product-centric commercial entities founded less than a decade ago and backed by less than $100 million in known funding. The selection process also involves a degree of manual curation.
Defining “open source” in the startup realm entails nuances, as some startups may conceal major features behind premium paywalls or employ more restrictive licenses. Runa’s curation criteria emphasize a product’s connection to its open-source repositories, albeit necessitating subjective judgment in the selection process.
The ROSS Index adopts a broad interpretation of “open source,” encompassing startups that may have transitioned from traditional open-source frameworks to alternative licenses like “source available” models. Notably, companies such as Elastic and MongoDB, which shifted away from conventional open-source licenses, are still considered under the ROSS Index’s framework.
According to Runa’s methodology, the focus lies on the “commercial perception of open source” rather than the specific licensing terms attached to a project. Noteworthy filters are applied, excluding businesses primarily engaged in side projects or professional services from the ROSS Index.
Comparative indices like the Open Source Index maintained by Two Sigma Ventures offer additional perspectives on the open-source landscape, encompassing a broader spectrum of projects beyond startups. GitHub’s trending repositories page and other similar platforms provide alternative insights without emphasizing the business aspect behind the projects.
The ROSS Index serves as a valuable tool for identifying noteworthy open-source startups deserving of attention in the evolving tech landscape.
