Summary:

London-based Openads, an open-source ad server, has managed to raise a $15.5 million (£7.9 million) second round of funding, with the aim o…

London-based Openads, an open-source ad server, has managed to raise a $15.5 million (£7.9 million) second round of funding, with the aim of stepping up product development and hiring more staff. (Rafat adds: We use the software to serve ads currently, but are moving away to a commercial software)

Its eponymous Openads product lets website operators insert image, movie, Flash, popup and other ads, target campaigns and monitor their performance. It can also plug in ad networks like Google’s (NSDQ: GOOG), it’s used by over 30,000 web publishers in over 100 countries.

So how can Openads command such a hefty investment for a product it’s giving away? It’s not the first to try to make money from open-source – Red Hat (Linux), Automattic (WordPress) and Acquia (Drupal) have all set about offering premium options on top of essentially free software. Today, Openads launches a hosted version that removes the need for users to run the software on their own servers there’s not yet any mention of that being a commercial offering but that appears the most likely monetisation avenue. Update: The hosted option will also remain free.

The round is led by Accel Partners, with investment from existing backers Index Ventures, First Round Capital, Mangrove Capital Partners and O’Reilly AlphaTech Ventures. Openads’ $5 million first round in June was led by Index with contributions from everyone else except Accel, which Openads CEO James Bilefield said shared his belief in the open-source model.

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