Venture capital firm Matrix Partners has just pumped $13.8 million into Digium, the creators of the popular open source PBX (private branch exchange) software Asterisk. The investment is another example of how VoIP-enabled products are entering the mainstream. While already leading to lower prices for some consumers, VoIP has increasingly made its way into the office, especially for businesses that do substantial international calling. The marriage of low-cost VoIP calls and open source PBX routing equipment would seem to be a marriage that both geeks and bean counters could love, and Matrix wants in on the action.
The move is a big vote of confidence in the PBX technology, which pits Digium against far larger players in the battle to privide PBX systems to businesses. But the high cost of traditional, closed-source systems has made inexpensive Asterisk systems attractive to a wide range of businesses, and Matrix general partner David Skok sees an opportunity for Digium to post some big gains. "As companies continue to be attracted to the cost savings and powerful new capabilities of Voice over IP, the opportunity for Digium becomes massive," he said. "Digium is definitely in a position to become the next big open source company, behind Red Hat, JBoss and MySQL. Their current revenues, profitability, and growth rates are extraordinary."
Digium has been growing by 100 percent a year, and now has more than a million users of the software around the world. It makes its money largely through consulting, configuration, and support. Unlike many smaller startups that seek venture capital, Digium is already profitable—and has been since 2002.
While Spencer has been doing a fine job running the company on his own, the management experience provided by Matrix should prove helpful as Digium continues to grow. Matrix was one of the first backers of JBoss, for instance, and helped that company turn another popular open source product into a viable business model, then brokered the sale of JBoss to Red Hat for $420 million.
Digium CEO Mark Spencer created Asterisk almost by accident back in 1999, when he founded a Linux support firm and found himself needing a PBX. Rather than buy one, Spencer took a shot at writing his own. That software eventually became Asterisk. Unlike some open source PBX programs, Asterisk was able to interface with traditional telephone equipment as well as multiple flavors of VoIP, making it relatively simple to drop into existing setups. Spencer has turned his open source software platform into a viable business, and has done such good job that he was recently named one of the coolest CEOs under the age of 30.
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