Garden Research: Weekly Recap #9
How Merit Systems is approaching the marketization of open-source, plus a recap of seed activity from last week.
Hey Everyone,
Happy Wednesday. For those who are new here, every week I deliver a recap of the activity in the US seed ecosystem, a full list of every completed round, and a deep dive into a company I find interesting. If you’re interested in following along, click below.
Open-source software, by many measures, rules the tech world. 96% of proprietary codebases are built on open-source components, 90% of cloud infrastructure runs on open-source software, and trillion-dollar industries have been built on tools like PyTorch and TensorFlow.
Yet only 12% of open-source maintainers receive any compensation for their work. This model generally works fine - until it doesn't. The 2021 Log4Shell vulnerability, which affected millions of systems simultaneously, stemmed from an overworked, under-compensated maintainer left responsible for keeping an essential open-source tool secure.
Previous attempts to fix this have largely failed. Efforts like GitHub Sponsors and Open Collective relied on voluntary donations that rarely scaled. Red Hat successfully monetized by selling enterprise support layers over open-source, but maintainers saw none of that money. The fundamental issue? There's no incentive for companies to pay for something that's free by design.
Merit Systems, which just raised $10M from a16z Crypto and Blockchain Capital, thinks they can change this by rethinking the entire model. Instead of relying on donations or goodwill, they're building what appears to be a marketplace for open-source development. Companies could post bounties for specific needs, with dedicated pools of funding, while developers search across bounties to work on projects that interest them.
The implications go beyond just paying maintainers. For enterprises, this could mean faster innovation without slow-moving internal teams. For startups, it's access to elite developers without full-time hires. For VCs, it's a way to ensure critical dependencies in their portfolio companies remain stable and secure.
Of course, significant challenges remain. Will companies actually pay for open-source work? Will developers embrace a market-driven model? Can Merit avoid the pitfalls that doomed previous attempts?
Full deep-dive and analysis linked below:
Last week, 56 companies raised Seed capital or announced a raise in the U.S. 🌱
Quick Stats 📈
Total Funding: $196M
Highest Round: $10.5M
Lowest Round: $170k
Average Round: $3.7M
Top Raisers 💰
Aligned Marketplace: National, value-based advanced primary care network designed to connect self-insured employers with high-quality primary care providers across the United States. Through a single, streamlined contract, employers gain access to a network of over 3,000 locations nationwide, offering employees personalized care with same-day or next-day appointments. Raised $10.5M in a round led by A* Capital.
Oumi: Oumi is an open-source platform designed to streamline the development of advanced AI models by providing an all-in-one environment for data preparation, training, evaluation, and deployment. Raised $10M in a round led by Venrock and Obvious Ventures.
Backline: Developed an autonomous security remediation platform that utilizes AI agents to automatically identify and fix security vulnerabilities and misconfigurations at scale. The platform integrates with existing security tools, consolidating information into a centralized security findings repository. Raised $9M in a round led by StageOne Ventures.
TrustLogix: TrustLogix offers a unified Cloud Data Security Platform that simplifies enterprise data security and privacy across multiple cloud environments. Their proxy-less, agentless architecture provides fine-grained access control and AI-powered data security posture management, enabling organizations to enforce least-privilege policies and monitor data access without impacting performance. Raised $8.6M in a deal led by Norwest Venture Partners.
Luxvitae Therapeutics: Biotechnology company focused on developing next-generation biologics for the treatment of cancer and autoimmune diseases. By employing precision bioengineering and advanced machine learning techniques, they aim to create targeted, effective, and less toxic therapies, including antibody-drug conjugates (ADCs) and monoclonal antibodies. Raised $8.5M from undisclosed investors.
My Favorites 🕺
Jord Bioscience - Raised $8.5M from undisclosed investors
Jord BioScience specializes in enhancing agricultural microbial solutions through its proprietary technology, which bolsters existing inoculants to protect crops, stimulate yield, and promote plant growth. By leveraging over 6,000 microbial isolates collected from diverse global soils, Jord's technology interacts synergistically with commercial inoculants and indigenous soil communities to inhibit pathogens, optimize microbiomes, and improve nutrient availability. This approach has demonstrated significant improvements in product performance, including a 135% increase when paired with a commercial Bacillus biofungicide, a 20% rise in above-ground biomass with a microbial stimulant, and a 158% enhancement in phosphate solubilization. Through these innovations, Jord BioScience aims to deliver consistent, scalable results that advance regenerative agriculture and support sustainable crop production systems.
Waterlily - Raised $7M in a deal led by Brewer Lane Ventures
Waterlily is an AI-driven platform that projects individuals' future long-term care needs, enabling the creation of personalized care plans. By analyzing personal health data, the platform estimates the likelihood, timing, progression, and costs associated with long-term care, helping users understand potential expenses not covered by health insurance or Medicare. Waterlily's step-by-step process guides users through selecting care options and exploring coverage solutions, aiming to protect savings and alleviate the burden on loved ones.
Shaga - Raised $6.19M in a deal led by Stanko Barle
Shaga is revolutionizing cloud gaming through a decentralized, peer-to-peer network that transforms individual gaming PCs into nodes, enabling ultra-low latency gameplay across various devices. By leveraging edge computing and bypassing centralized servers, Shaga's platform allows users to access high-end gaming experiences without the need for expensive hardware upgrades. Additionally, gamers can contribute their computing resources to the network, earning rewards and fostering a community-driven ecosystem that democratizes access to premium gaming.
LightManufacturing - Raised $3.2M from undisclosed investors
LightManufacturing Inc. specializes in sustainable solar thermal manufacturing solutions, utilizing their proprietary heliostat technology to concentrate solar energy for industrial applications. Their Solar Rotational Molding (SRM) process enables the production of durable plastic products, such as water tanks and boats, without the use of fossil fuels, achieving zero carbon emissions and zero fuel costs. Additionally, their H1 heliostats provide up to 2 kW of reflected energy per mirror, offering scalable, off-grid manufacturing capabilities with significantly reduced capital expenditures.
Heat2Power - Raised $3M in a deal led by Innovation Partnerships
Heat2Power is developing innovative solutions to enhance energy efficiency and support the energy transition. Their modular high-temperature heat storage system addresses common challenges in energy storage by offering scalable performance, simple construction with inexpensive materials, and the ability to store industrial waste heat or excess power from renewable energy sources. Additionally, their modular hot gas engine system efficiently generates electricity from various heat sources, including stored excess power, industrial waste heat, and biofuels, with an efficiency around 50%. Together, these technologies form a "Power-to-Heat-to-Power" system that aims to be more efficient and cost-effective than existing energy storage solutions.
Martin - Raised $2M in a deal led by Eight Capital, SV Tech Ventures, and Pioneer Fund
AI-powered personal assistant designed to streamline daily tasks through natural language interactions. Users can communicate with Martin via text, call, email, or Slack to manage calendars, emails, to-do lists, and more. The platform integrates seamlessly with various applications, enabling functionalities such as sending messages, setting reminders, and conducting web searches, all aimed at enhancing productivity and organization.
You can find the full list of startups that raised seed capital last week linked here
Seeya next week!