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Open-Xchange phones home for funding

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Open source groupware software maker Open-Xchange has reeled in $9m in its second round of venture capital funding.

After commercial Linux distributor Xandros bought Scalix, Cisco Systems bought Postpath, and Yahoo bought Zimbra, that left Open-Xchange - formerly of Germany and now of Tarrytown, New York - as one of the few independent suppliers of open source (and commercially supported) software for email messaging and collaboration.

The OpenExchange groupware package was created by a German software company called Netline Information Services, and the company's software entered the mainstream (well, sort of) when German Linux distributor SUSE Linux created a special variant of its SUSE Linux Enterprise Server 8 operating system that tightly coupled SLES with OpenExchange. This software was dubbed SLOX and was only distributed in this manner.

In the fall of 2004, a year after Novell had acquired SUSE Linux, Netline took its software open source through the Open-Xchange project (somehow misplacing the capped E) under a GPL license. In June 2005, Netline moved to the suburbs outside of New York City and changed its name to Open-Xchange to match its product name. Since that time, Open-Exchange has launched another "appliance edition" of its software atop an obscure Linux distro called Univention Corporate Server 2.1 and has quadrupled its installed base to 8.4 million seats worldwide.

The company has more than 3,500 commercial customers using its code (those millions of seats include the open source versions), and since the summer of 2007, it has offered a hosted version of Open-Xchange for companies who want their own groupware setup, but don't want to manage the code.

While Open-Exchange might have moved to the United States, it still has strong ties to Germany. In fact, it has secured the $9m in funds from eCapital Entrepreneurial Partners, a VC based in Munster, Germany. BayBG and BayTech Venture Capital, both of Munich, also kicked in funds this time around. Frank Hoelzle, the managing partner at eCapital is joining the board of directors for Open-Xchange as part of the funding. In 2006, BayTech and another VC named Business Angels kicked in $8.8m in funds to help the company ramp up its operations in the United States.

This time around, Open-Xchange says that it will be using the funds to support software development and to expand its business in the States, in Europe, and in emerging markets. Rafael Laguna, the company's chief executive officer, said that the funds would help it add another 10 million seats in 2009. ®

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