A founder asked me last month whether going open source would shrink the Series A they were about to raise. The honest answer is that the question itself is the wrong question, and the data from three companies that have already done it makes the wrongness visible. GitLab, Mattermost, and HashiCorp each built their businesses on code that anyone could clone from a public repo. Each one raised at scale afterward. The numbers are not ambiguous. They are also not the most useful part of the story. The differences between how each company got there are the part worth studying.
GitLab grew the community before chasing the rounds
GitLab started as a project in Ukraine in 2011 and did not become a real company until 2014. The first outside money arrived in 2015, when a Y Combinator seed round somewhere in the $1.5 to $1.7 million range valued the company at $13 million, with Khosla Ventures on the cap table. A $4 million Series A followed later in 2015, and then the team did something counterintuitive. They stopped raising for years and instead poured effort into the product and the user base.
The auction-style returns came later. The 2018 Series D was $100 million at a $1.1 billion valuation. The 2019 Series E was $268 million at $2.75 billion post-money. The 2021 secondary round, ahead of the public listing, marked the company at $6 billion. The path from the 2015 seed to the 2021 mark works out to roughly 460x over six years. The story is not “open source limits you.” The story is “open source, paired with disciplined growth and a real community, can scale to a billion-dollar-plus valuation in a single decade.”
- The 2015 seed valued GitLab at $13 million.
- The 2018 Series D marked the company at $1.1 billion.
- The 2019 Series E marked it at $2.75 billion post-money.
- The 2021 secondary round put the mark at $6 billion.
- The seed-to-2021 ratio works out to roughly 460x.
Mattermost kept the cadence slow on purpose
Mattermost is the open source Slack alternative, and the comparison to GitLab’s pace is the point. The project had been around for years before the company raised a $3.5 million seed in February 2017. The first significant outside round, a $20 million Series A led by Redpoint Ventures, did not come until February 2019. The $50 million Series B followed four months later in June 2019, led by Y Combinator’s Continuity fund with Battery Ventures joining.
The thing to pay attention to is not the dollar amounts but the timeline. Two years between seed and Series A. Four months between A and B. The team built deliberately between raises instead of treating each round as a milestone to chase. The trade-off is explicit: slower top-line growth in exchange for keeping more equity and keeping the board aligned with the founders’ clock. For some companies that is a bug. For founders who care about control, it is the feature.
- The seed round in February 2017 was $3.5 million.
- The Series A in February 2019 was $20 million, led by Redpoint Ventures.
- The Series B in June 2019 was $50 million, led by Y Combinator’s Continuity fund.
- The two-year gap between seed and Series A gave the team room to grow between rounds.
- The trade-off was slower top-line growth in exchange for more equity retention.
HashiCorp showed the open core playbook scales
HashiCorp took the same underlying playbook as GitLab and Mattermost, open source first, business on top, and pushed it to a different scale. The team built Terraform, Vault, Consul, and Nomad as open source projects and layered enterprise features and commercial products on top. Investors did not flinch at the open source base. They wrote checks at nine-figure valuations because the enterprise business built around the tools was the actual product, and the enterprise business was already large.
The pattern that ties all three together is the same. Going open source does not cap the funding. What it does is force the founders to be specific about what investors are buying, because anyone can see the code, the commit history, and the adoption curve. Some founders find that uncomfortable. The companies that raised at scale treated it as clarity rather than exposure.
What investors are paying for when the code is free
The “but anyone can clone the repo” objection is the one the founder who asked me the question was circling around. The honest answer is that investors are paying for three things, and none of them is the source code.
The first is the community. A large, active user base is hard to clone, because switching costs (the engineering hours a team has to spend to migrate off one tool and onto another) are real even when the software itself is free. The second is the adoption signal. Enterprise procurement teams want vendors whose tools are already in use by groups they trust, and a public community provides that signal in a way that no marketing budget can fake. The third is the business built on top. Open core editions, SaaS hosting, support contracts, and enterprise features turn a project into a company. The code is the foundation. The company is what the foundation supports.
- The community is hard to clone because switching costs are real.
- The adoption signal matters to enterprise buyers more than the marketing does.
- The business on top of the code is what investors are actually pricing.
- The open source license makes all three signals visible to anyone who looks.
- Treating the code as the product instead of the foundation is where founders get stuck.
How to choose the right pace for your project
If you are building an open source project right now, the GitLab playbook is the closest reference if you want to raise at scale once product-market fit is real and you can stomach the dilution that comes with fast growth. The Mattermost playbook is the closer reference if you care more about keeping equity and growing on a longer clock than about absolute valuation milestones. The HashiCorp open core approach scales further than most founders expect, but only when the underlying tools are already foundational to large infrastructure stacks. The market does not reward which playbook you picked. It rewards whether the next round is justified by the business underneath the previous one.
Trade-offs
The numbers from the three companies are unambiguous, but the trade-offs between their paths are not. Fast growth, the GitLab pattern, brings more capital for hiring, sales, and acquisitions. It also brings more dilution (the shrinking of existing shareholders’ percentage ownership as new shares are issued) and more board pressure on the timeline between rounds. Slow growth, the Mattermost pattern, preserves control and keeps the cap table clean. It also caps how much you can invest in growth at any given moment, which can leave openings for faster competitors. The HashiCorp open core playbook scales to nine-figure valuations when the tools are already foundational to enterprise infrastructure. The same playbook does not translate cleanly to every category, because not every open source project has the same kind of strategic dependency that Terraform or Vault has inside a typical enterprise stack. The right answer depends on what you are actually trying to build. The data shows the model does not cap you. The data does not tell you which path to pick.
If you are weighing open source against a future raise, the question is not “will open source shrink my valuation.” The question is “which playbook matches the business I want.” Pick the one whose trade-offs you can live with for a decade. The funding pace that fits the business is the one that holds up after the press release fades.
Bottom line
Three companies with three different paths proved the same thing at scale. GitLab grew the community first, then raised to a $6 billion 2021 mark on the back of a 460x seed-to-2021 ratio. Mattermost kept the cadence deliberately slow and raised $73.5 million across three rounds on a longer clock. HashiCorp layered enterprise sales on top of four foundational open source tools and scaled the open core playbook to nine-figure valuations. Open source is not a funding cap. It is a forcing function for being specific about what investors are buying, and clarity is what makes a fundraising pitch hold up under scrutiny.