Sam Ragsdale, Ryan Sproule and Mason Hall raised $10 million in a seed round co-led by Andreessen Horowitz’s crypto fund and Blockchain Capital.
Sam Ragsdale
Interior of Brooklyn’s Domino Sugar Factory, built in the 19th century landmark Nestled on the banks of the East River, three engineers transformed a 3,000-square-foot former factory into a workshop to house their new startup, Merit Systems.
It’s been five months since Sam Ragsdale, Ryan Sproule and Mason Hall founded Merit, a project they hope will solve a long-standing challenge in software: rewarding open source developers. On Thursday, Merit announced it had raised $10 million in a seed round co-led by Andreessen Horowitz’s crypto fund and Blockchain Capital.
Sproule said Merit is working hard to solve the “attribution problem” in software development. In the open source world, it underpins Apps used by over 97% of consumers Every day, tech giants and independent programmers contribute to products that anyone can access and improve for free.
“Because the price is zero and it’s not vested in the people who created it, there’s not a very sustainable set of economics to keep it alive,” said Ragsdale, chief executive of Merit. Worked at Andreessen Horowitz for three years. Google.
A vast amount of open source code can be found in artificial intelligence frameworks, databases, web browsers, and mobile operating systems. Some of the most famous open source projects include Android (now owned by Google), GitHub (owned by Microsoft) and apache sparkthe core data analysis technology of Databricks.
While many companies have been able to commercialize versions of open source software or sell support and services as a way to generate revenue, there is no consistent model for rewarding individuals or small groups of contributors who regularly do valuable work.
Merit Systems chief technology officer Ryan Sproule works on a whiteboard at the company’s headquarters in the Domino Sugar Refinery.
Sam Ragsdale
Chris Dixon, managing partner of Andreessen Cryptocurrency Fund, said open source is “underfunded and overly reliant on altruistic contributions.”
In comments posted on X, Dixon wrote that Merit is “building a protocol that appropriately attributes and rewards contributors based on the value they create.”
Ragsdale, who worked with Dixon at the venture capital firm, first met Sproul in college at Washington University in St. Louis. Sproule then went to Blockchain Capital, a San Francisco cryptocurrency-focused firm, and the two subsequently teamed up with Hall, who is also a member of Andreessen’s crypto team.
The project is still under development, although the company said its post-money valuation has reached $55.5 million. Most of the current users are friends and acquaintances of the founder. Merit expects to launch a wider version by the end of February after gathering and integrating feedback from early testers.
Sproule, CTO of Merit, formerly Amazon Web services engineers say the startup has the opportunity to sit “in the middle,” connecting software buyers and users with the actual creators of the technology.
“If you can solve this attribution problem, you can basically have users pay directly for the software that people build,” he said.
Three entrepreneurs in the sugar factory
The Williamsburg neighborhood in Brooklyn, New York, where the small Merit team is based, has transformed over the past few decades from a former industrial area to a vibrant center for arts and music, and more recently, to a vibrant, upscale community. and luxury stores.
But the old Domino’s factory, two blocks north of the Williamsburg Bridge, remains a relic of the past. The refinery was the last operating industrial facility on the waterfront, closing in 2004.
After years of neglect, the building was reimagined as a center of modern innovation, with panoramic views of Manhattan visible through its original brick walls. The facility opened in 2023 as a modern office building and now offers divided entrepreneurial spaces as well as full floor space for large organizations.
Ragsdale said the building’s history is important to the startup’s story.
Merit Systems co-founders Ryan Sproule, Sam Ragsdale and Mason Hall code in their Brooklyn office.
Sam Ragsdale
The name Merit Systems is “a throwback to companies from the ’60s or ’70s that had very industrial names that accurately explained their business,” Ragsdale said. A strength is a simple description of the company’s mission.
There are also coveted views of Manhattan.
“You can see the skyline through the old brick in the windows,” Ragsdale said.
There are four desks and eight chairs in the office. A whiteboard filled with notes and mathematical equations occupies the only corner of the currently occupied office, while a 3D printer at Ragsdale’s home produces prototypes, including the company’s hypercube logo.
“We’re definitely not going to use all 3,000 square feet,” Ragsdale said. “We’ll get there eventually.”
Merit plans to add seven new employees in the coming months, specifically looking for people who want an in-person work culture.
“When you sit next to people, the flow of ideas between people is very important,” Sproul said. “We don’t really believe in a completely decentralized remote working model for early-stage companies.”
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