When Knut Sveidqvist was approached by Open Core Ventures (OCV) about commercializing his popular open-source diagramming tool Mermaid, he was initially skeptical. He had been contacted by venture capital firms before, but something about OCV felt different.
"I had some contact with other venture capital companies in the past," Knut explains, "but OCV resonated much better than previous companies. Open core seemed like a good model. I got a good impression from everyone.”
Meanwhile, Andrew Firestone was at a crossroads in his entrepreneurial journey. Having just come off a startup that was "a good experience, but a bad outcome," he was weighing his options. "I was either going to start something from scratch and was looking at a bunch of different options for that, or I was looking for something that was a little bit of a hybrid," said Andrew. "Joining Mermaid Chart as CEO was the right balance."
Ultimately, Knut and Andrew decided to take the leap. Knut founded Mermaid Chart with OCV, and Andrew joined as CEO a year later. Their partnership has transformed an open-source side project into a venture-backed startup that secured a $7.5 million Seed round from investors like Microsoft’s M12, Streamlined Ventures, and Sequoia Scout Fund. Their story illustrates how having the right support structure and the right co-founder can take a passion project to a thriving company.
From open source author to CTO
While traditional venture capital firms typically invest in existing companies with established founding teams, OCV takes a more hands-on approach. We identify promising open source projects, recruit the original creators, and then help build a company around the technology.
For Knut, who had created Mermaid while working at a telecom company in Sweden, OCV’s model addressed a critical challenge: "Working on Mermaid on the weekends and evenings wasn't sustainable in the long run. You can easily get burned out. I almost got burned out at one point when I tried to keep a zero-issue policy. And when you have hundreds of thousands of users, that's not really feasible in your spare time."
Knut had reached an inflection point familiar to many successful open-source creators. The project had grown beyond what he could manage alone, but taking the entrepreneurial leap carried significant risks. "I started to dream about doing it full time and actually getting paid to do it," he explains, "but it didn't really materialize. I had small kids, didn't want to take the plunge at that point." What attracted him to OCV was our understanding of open source projects and commitment to preserving their integrity while building sustainable businesses around them.
OCV's approach meant Knut could focus on what he did best–building an amazing product–while the venture firm handled the administrative hurdles of starting a company and found him the perfect business partner. "It was really helpful to have OCV handle the setup stuff," Knut shares, "because if you start something from scratch by yourself, you need to handle accounting and all those administrative things. I could avoid that and just focus on building the best product."
Once OCV formed the company, Knut moved quickly to develop a viable product: "In the first weeks, we focused on getting the initial idea of what we were going to build and what to charge for. We made sure to get something out quickly. I knew it was important to get something in front of the customers as soon as possible and to get initial feedback."
Existing traction is a CEO’s superpower
Ten months after OCV launched Mermaid Chart, OCV introduced Knut to Andrew Firestone, an experienced entrepreneur and investor. Andrew describes his first impression of the model: "From a model perspective, it was the most non-founder thing I considered... it was a job, but at the same time, you're a founder. It was against my DNA as an entrepreneur, but the structure made sense for me then."
What drew Andrew to Mermaid Chart was the project's existing momentum and the breadth of possibilities it presented. "The thing that was exciting to me is that from a timing perspective, I felt like Mermaid was sitting in the right place at the right time to capture a huge opportunity in AI," said Andrew.
Unlike starting from scratch, joining Mermaid Chart meant building on a foundation with a sense of product-market fit and an established user base. "Having the distribution of the open source project, having all the traction, the data, and then all the fun business problems and things that you can solve on top of that…those are the types of problems that I like to solve from a product and growth perspective," said Andrew.
Even with the project's potential, personal connection remained paramount. Andrew continues, "To me, it was really about the relationships – working with Knut, working with OCV, working with Sid. Those were really important to me because I think that without good relationships, my time is just worth more than money. So if I'm going to be doing this, I want to actually be able to enjoy it and actually be able to succeed and have the right kind of people around me."
Finding co-founder alignment
The right founder match transformed both the company and the founders themselves.
For Knut, having a business-focused partner meant he could finally devote himself fully to the project he loved without the burnout: "Before Andrew came aboard, I felt that I had to drive everything. It's all on my shoulders, all the problems. When he joined, I had someone to share that with, and that was really nice."
For Andrew, joining a project with existing traction gave him a foundation to build upon: "Knut and team had done all the things that are no fun... they built the payment system, the account system, the database structure, like they had all the things that you need to be able to make this work."
Their complementary skills created something neither could have built alone. Andrew brought the business expertise to secure major funding and chart a growth strategy, while Knut provided the technical foundation and deep understanding of the community he had built over the years.
The process wasn't just about finding business compatibility, it was about finding deep alignment on values, work style, and vision. Andrew notes, "Knut and I both had the same general disposition. We're worlds away in terms of where we live and our general backgrounds, but I think being smart, ambitious, but also really kind and thoughtful, aligned with what I wanted."
Seed round success
When Andrew joined Mermaid Chart, the company was still in its early stages. "I thought I had a pretty good idea of what it would be like, but it was definitely different," Andrew recalls. "The first thing I did was look at the Stripe dashboard. Okay, how much money, how much revenue is this company actually making? And it was basically none."
After spending six to eight weeks learning the business, Andrew made the bold decision to start fundraising: "Either we fundraise at the end of the year in this kind of end-of-year fundraising window, or we fundraise at the beginning of the year... if we nail it, we're going to fly forward and really be able to play offense in the new year."
The fundraising journey was far from easy. As Andrew describes it, "I took over 300 meetings to get this fundraise done. And before the end of the year, we had no capital actually committed. So I started fundraising in October, two months later, with no capital committed, and a lot of my network was utilized at that point."
The breakthrough came when Microsoft committed to investing. "Once I got that and got the narrative down, it went from a 5 percent close rate to an 80 percent close rate overnight. And we were trying to raise 3 million. We ended up getting over 9 million in commitments. And then, reducing that down to seven and a half because we didn't need that much capital." Mermaid Chart's impressive fundraising round included investments from Microsoft's M12, Sequoia Capital, and Open Core Ventures, among others.
An open core blueprint
Looking ahead, Mermaid Chart is set to expand its software capabilities significantly. Plans include introducing automated documentation tools tailored for software engineers, advanced AI-driven diagramming features, and comprehensive workflow management solutions.
The Mermaid Chart story serves as an inspiring blueprint for open-source creators wondering how to transform their passion projects into sustainable businesses. By combining Knut's technical innovation with Andrew's business leadership and OCV's support and funding model, Mermaid Chart has rapidly evolved from a popular GitHub project into a well-funded startup with enterprise ambitions.