Frappe + Zerodha

Zerodha's (Rainmatter) investment into ERPNext signals a massive acceptance of Open Source in enterprise software. Here is why it matters.

 · 5 min read

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It gives me immense pleasure to announce that Rainmatter / Zerodha has decided to invest $1.35M (Rs 10cr) into Frappe Technologies to supercharge its product development and growth. Accepting the first round of funding after 12 years must be a record of some sort, but we were waiting for the right time and the right investor, and it was well worth the wait.

Zerodha is easily one of the most inspiring tech startups in India. Without any external funding they raced to being the market leader in a highly regulated industry, stock broking. It is even more incredible when you realize that their tech stack is built by a tiny team of 30 developers, almost entirely built in house with minimum external services. Kailash and Nithin are terrific leaders who bring a zen like calmness, confidence and competence into everything they do. The fact that Zerodha chose Frappe and ERPNext as the platform to build their back office operations is something we are very proud of.

This is the real magic of open source. It enables companies to build amazing businesses without depending on expensive proprietary software. Technology startups would not exist today without the contributions of thousands of high quality contributors building and sharing their code. One single project, Linux, is at the heart of billions of devices globally, and makes everything from mobile phones to supercomputers function, creating probably trillions of dollars of wealth. So it makes perfect sense that Zerodha chose to complete the loop by investing some of their success in the very model that helped them build their stack.

When we were building ERPNext, it was very clear to us from the very beginning that any software that has to be universally successful, has to be open source. ERP is an extremely hard software to build and it took us a really long time to get anywhere close to something that was reliable and stable. The path we chose was also rather torturous. Rather than build a simple client-server application, we built a metadata web framework that automated most of the screens and workflows (it’s called Frappe Framework now). The application ERPNext was then built on top of that framework. If that was not enough, we built our own cloud architecture and subscription billing platform, again with a very tiny team.

Over the years we have been helped by our customers and users who had a lot of patience and worked with us as we built each piece of the business platform - financial accounting, supply chain management, people management and even e-commerce. One way to describe ERPNext is that it is a “Wikipedia of business processes”. Today there are close to one thousand types of objects (like customers and invoices) that are available out of the box in ERPNext. The flexibility of the product is that you can also quickly create any new type of object without writing any code, making it easy to adapt to any kind of enterprise.

ERPNext is also a “monolith”, which means that all the features come embedded in the core platform, and you can easily switch off those you don’t need. The reason why this is important is that users get a unified working product rather than them depending on piecing together multiple applications to manage their businesses, thereby eliminating long term maintenance and sustainability problems. As an open source project, a monolith also means fewer dependencies and better assurance.

Sustainability of open source projects has become a topic of big concern, and the entire world today runs on software created, maintained and shared for free by volunteers often on the verge of burning out. In the early days when we were building ERPNext, we only had a hint of this problem. We were in fact building two separate things, a free software and a business that sustains it. On the face of it their goals seem opposite, but from another perspective, like the yin and the yang, both are necessary. A fantastic product like ERPNext would not be possible without an amazing team like Frappe behind it and a successful business like Frappe would not be possible without the credibility and trust it gets due to its contribution to ERPNext.

With this funding, we understand that we must continue to feed both these elements. We must keep investing in the free software as well as improve the quality and value of services we offer our customers. For this, we have to keep working closely with our users and community to keep completing and building this massive platform. Today’s most of ERPNext’s challenges lie in building localization for the various countries and pre-built integrations to popular platforms along with continuous improvements in user experience, performance and security. Along with that we need to keep building partnerships in various countries around the globe so we can help companies adapt and use ERPNext to its full potential. Our goals with this funding would be to keep expanding and improving the product, its quality and strengthen the organization.

Getting funded is a significant milestone for the project. Personally it has been an amazing journey for me so far. It would not have been possible without the amazing bunch of people who work at Frappe and create magic every day. I especially want to thank Nabin, Umair and Prakash who have been a part of this journey for 10 years and are almost like co-founders and have done as much heavy lifting as myself. They along with our families and support systems have been what has sustained our rather lonely journey for the last 10 years. Credit also goes to my family for providing the seed money and encouragement for me to start this business.

It is also very important to thank our amazing community, with whom we have sometimes had a hot and cold relationship. After all these years, we understand and respect each other a lot better. The community has played the role of an enabler and has welcomed us with open arms across cities all over the world. We have built great friendships sharing this common passion. Zerodha being part of the community is really the icing, and reinforces the stellar role played by the community.

In many other ways, it is still day one for us, and the funding does not change that. We have a long way to go, and have big plans for ERPNext. We want to build the most amazing tool for businesses that is available for free and shared with the world. We also want to work with companies that see value in our services and help them grow to their next level.

ERPNext is 100% free to use, study, modify and redistribute and will always be. Some people feel that capitalism and communities live at odds with each other, but we want to change that. We want to create a product, company and ecosystem that lives symbiotically within society rather than feeding off it. ERPNext belongs to the world and our job is just to make it better, while also running a successful business that adds value to its customers. Thanks to this partnership with Zerodha, we believe we can do it much better.

Expect great things from us in the coming months and years!


Rushabh Mehta

Rushabh is a software developer and founder of ERPNext. He usually writes about the startup experience, open source and the technologies he is working on.

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