Those who are looking to fund companies within the tech industry are opting for a guarded approach these days. While Open Source companies are still a pretty hot item, I like to think that those who are considering such an investment are taking a close look at the business plan first. Just because a company is developing Open Source software does not mean that it will be profitable.

It is well known among tech startups and investors that the words “open” and “source” used together can gain positive attention from would-be angels looking to lift the next hot company, but there is also agreement that the scale of open source investment — while strong and growing — is not at the same fever pitch of the dot-coms.

Instead, explains Draper Fisher Jurvetson associate and SugarCRM board director Josh Stein, open source is more like the Internet boom, where regardless of a company’s open source use, ventures must at least have a plan for how to deal with it.

“There’s no question there is a lot of attention around the words ‘open source,’” Stein said in an interview with NewsForge. “Is it to the point of a bubble? No. When I think of a bubble, I think of the late ’90s when hundreds of thousands of companies were funded on the thinnest of premises. The number of open source projects getting funded is small.” [Read the rest]