If you want to build open source software and still have money for food, here’s what looks like it might work:
- optional paid convenience features (freemium/open core)
- non-profit sponsorships
- or public funding.
Direct monetization through users like selling licenses, SaaS, Patreon, or donations mostly doesn’t work. Paid hosting is risky because it’s too easy to copy. Consulting? a conflict of interest waiting to happen.
If you like Digital Sovereignty, you like Open Source
When building products for digital sovereignty, open source is really the only way that makes sense. The moment you have to trust a closed-source vendor, you can be locked out of your own data at any time. “The Cloud” is just someone else’s computer, and if that someone decides to raise prices, or shut down … well, good luck with your data.
No Money No Food
I have some great ideas for open source projects that I would like to build one day. But as long as I cannot find a way make the financials work, those projects will never happen. That’s why I went on a journey to review financing options for open source projects.
Selling or Renting the Software
It sounds simply: build something great, sell licenses.
But hyperscalers love to fork successful open source projects. The most infamous example is when Amazon launched “Amazon Elasticsearch Service” in 2015, which Elastic considers “a pretty obvious trademark violation”.
Elastic was back then developing open source, and they said: “We’ve tried every avenue available including going through the courts, but with AWS’s ongoing behavior, we have decided to change our license so that we can focus on building products and innovating rather than litigating”
And it’s not just the big players. Open source apps get cloned, reskinned, and sold as commercial products all the time. And it’s only getting worse now that AI can easily “re-implement” an Open Source project with a more lenient license.
Patreon, Donations, and Corporate Sponsorships
The numbers are honestly depressing:
- Sindre Sorhus actively maintains 1,100+ npm packages with 2 billion downloads per month → $81.61/month on GitHub Sponsors
- Laravel’s Taylor Otwell → 8 paying members
- microG (the Google Play Services replacement) → 24 sponsors
That’s not going to pay for a developer’s time, let alone a team. Only if you have massive reach, sponsorships can work:
- Vue.js: Gold sponsors pay $500/month for homepage placement
- Dear ImGui: Blizzard, Riot, and Valve are sponsors
- KiCAD: Three sponsors at $15,000/year each
Donations and sponsorships only work if you have enough users/website visitors that you can essentially sell their attention. It’s advertising with extra steps.
Paid Hosting
The most famous example here is WordPress. Automattic (the company behind WordPress.com) sells hosting services for the open source WordPress software. Then WP Engine came along and started eating their lunch. WP Engine built a massive hosting business on top of Automattic’s Open Source project. This led to an absolutely wild shit-throwing-contest, where WordPress co-creator Matt Mullenweg called WP Engine “a cancer to WordPress” and accused them of not contributing enough to the open source project.
Some agreed, some disagreed. DHH said: “Automattic is completely out of line”.
The Docker Desktop subscription business seems to work OK.
Elastic’s hosted Elasticsearch offering was dead on arrival because AWS just hosted Elasticsearch themselves and became a direct competitor.
=> Paid hosting is very risky. Someone with more resources can easily gulp up your hosting business.
Freemium / Open Core
This is where things actually start working. everything security and privacy-relevant stays open source, but convenience features are closed source and commercial:
- GitLab
- NGINX Plus
- Redis Enterprise
They earn trust with an open core, then monetize enterprise features.
Non-Profit Sponsorships
Most of the open source software I actually use and love falls into this category:
NLnet Foundation (Netherlands) provides grants between €5,000 and €50,000. All software must use a recognized FOSS license. Among others, they funded EteSync (encrypted sync), and they’re part of the EU’s Next Generation Internet initiative.
FUTO is an organization “dedicated to giving people back control over their technology”. They’ve given out over $5 million in “legendary grants” to established open source projects. They fund projects like Immich and the Android Voice Keyboard.
Blender Foundation excels at sustainable open source funding. They currently receive about €275,825 per month from 7,630 individual donors and 46 corporate sponsors. The Blender Foundation is an independent public benefit organization with the purpose “to provide a complete, free and open source 3D creation pipeline”.
Other examples:
- VLC → VideoLAN (their own non-profit)
- GIMP → GNOME Foundation
Public Funding
I’m aware of these options in Europe:
Sovereign Tech Fund (Germany) invests globally in “open software components that underpin Germany’s competitiveness”. They focus on “open digital base technologies” like libraries, package managers, communication protocols, developer tools, and encryption. But they explicitly don’t fund prototypes or apps. Instead, they gave money to Let’s Encrypt and curl.
ZenDiS / openDesk (Germany) is a publicly-funded company of the German Federal Government that develops open source office tools for public administration.
EU Next Generation Internet (NGI) has invested more than €250 million since 2018, supporting over 1,000 internet researchers and innovators. Projects funded include Mastodon (via Horizon Europe) and Jitsi (via EU NGI).
German BMBF (Federal Ministry of Education and Research) has funded projects like Conduit.rs, a Matrix chat server written in Rust.
Consulting
Companies like Red Hat, Canonical (Ubuntu), MariaDB, and KiCAD offer consulting services around their open source products.
But if your software is easy to use and runs well, nobody needs paid consulting. You’re essentially incentivized to make your software just complicated enough that enterprises need help. That’s… not great for users.
Here’s my Plan
So based on this research, how will I finance my Open Source idea?
- I’ll try to get non-profit grants from NLnet or FUTO or public funding
- Once I have some users, I can try “Open Core” with paid enterprise features
- If things go really well, I might one day have enough of an audience to make sponsorships work.
I’ll stay away from paid hosting (too easy to copy), relying on donations alone (doesn’t scale), or pure consulting (conflict of interest).
The uncomfortable truth is that most open source developers are either struggling to make ends meet, funded by their employers (who benefit from the software), or working for free in their spare time. The funding models that work require either outside support or massive user numbers.
Happy open sourcing :) But stay realistic about the money.