Open-Source Startup Aiven Raises $60 Million in New Funding

Aiven Inc., a cloud-based open-source software services firm, raised $60 million in a second funding round in less than a year, as investors bet on growing demand from chief information officers for ready access to shared computer code.

The new injection of capital, which comes just seven months after a Series C round netted $100 million, lifts the Finnish startup’s valuation above $2 billion, the company said. Its latest round was led by World Innovation Lab and IVP, both of which had participated in earlier rounds.

Oskari Saarenmaa,

Aiven’s co-founder and chief executive officer, said he plans to use the additional funds to expand the company’s global footprint, which currently includes some 700 customers in 50 countries. A Singapore office, set to open this year, is part of a broader move into Asia-Pacific markets, he said.

Mr. Saarenmaa and a small team of software engineers launched the startup roughly five years ago in Helsinki. Today, it has more than 200 employees world-wide.

An outgrowth of the collaborative spirit of software development in the early days of the web, open-source developers make software available free of charge, enabling programmers to modify, share or create new apps from the underlying source code without paying licensing fees.

Examples include the Android operating system, the Firefox browser and the Python computer language.

By allowing companies to freely use one another’s software—with some restrictions—open-source systems offer interoperability, while fostering innovation. Vendors like Aiven can charge for added services or enterprise-grade features.

Aiven helps companies manage open-source projects on a public cloud platform. That enables CIOs and other corporate information-technology leaders to access computer code, data and other resources from anywhere—a key advantage during Covid-19 lockdowns and remote work.

Mr. Saarenmaa said the open-source community is in a transformative period. Many IT vendors that originated as open-source developers are placing restrictions on their own software licenses—decisions he says are shortsighted and driven by profits. “This has formed an industrywide myth claiming open-source business models are no longer sustainable,” he said.

David Mooter, a senior analyst at IT research firm

Forrester Research Inc.,

agreed the business model is doing just fine. “I haven’t seen open source decline,” he said. “If anything, it’s likely increasing in use.”

In a landmark legal battle, the U.S. Supreme Court earlier this year ruled that

Alphabet Inc.’s

Google didn’t violate copyright protections in using bits of

Oracle Corp.

-owned Java computer code to enable its Android mobile operating system to connect to other software. Sun Microsystems Inc., which created Java as free and open-source software, was acquired by Oracle in 2010.

Some of the world’s largest technology companies have embraced open-source software development in recent years.

International Business Machines Corp.

in July 2019 bought Red Hat Inc., one of the world’s largest open-source developers. Just a year earlier,

Microsoft Corp.

acquired software-code repository GitHub Inc.

“The current state of open source is still hot and we haven’t seen a slowdown in venture backing of open source companies,” said Kelley Mak, a partner at enterprise-technology-focused venture-capital firm Work-Bench. The firm isn’t an investor in Aiven. “Given the benefits that open source provides for building a community and developing mindshare and goodwill in the age of developer-driven software adoption, I would only imagine open source to be even more embraced,” he said citing

VMware Inc.

and Microsoft as high-profile advocates.

Aiven’s Mr. Saarenmaa said the company’s $2 billion valuation is evidence of that.

“When Aiven’s other co-founders and I set out to solve a challenge facing developers all over the world, I knew this business had major growth potential,” he said. “It’s still an exciting and humbling milestone.”

Write to Angus Loten at angus.loten@wsj.com

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