Mulesource, the leading open source integration framework, announced today the successful close of a $12.5m Series B. Lightspeed led the deal, with return participation from the Series A leads, Hummer Winblad and Morgenthaler.
The raise reflects five important characteristics of the company:
- large target market - the integration market is roughly $8bn
- large pricing umbrella - incumbents' products sell for ~$90k/cpu
- very active developer community - hundreds of contributors
- mission critical use cases - high conversion rates from free to paid
- ramping customer acquisition and bookings
As I wrote in a prior post, the closer to a transaction the higher the open source conversion rates. Enterprise risk controls demand that software that touches critical to revenue/transaction systems be supported.
The attached graphic, forgive my graphics design skills, helps me think through the opportunity
- how large is area A, ie the degree of overlap between a project with an active developer community and a enterprise use case that is mission critical?
- how much headroom is there in area B, ie the pricing umbrella created by the incumbents' price points, TCO, and cost of sale and implementation
I would argue that Mulesource offers a very large overlap, represented by area A, with 10x price umbrella support, represented by area B in the above graphic. The financing, but more importantly the amazing developer, customer, and employee acquisition traction validates the premise.
Congratulations to the team.