Ollama raises $65M Series B as open-source AI tool hits nearly 9M monthly users

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Ollama raises $65M Series B as open-source AI tool hits nearly 9M monthly users

Ollama, the open-source platform that lets developers run AI models locally on their PCs, has closed a $65 million Series B funding round led by Theory Venture, founder and CEO Jeff Morgan confirmed to Bitcoin World. The round brings the company’s total funding to $88 million, following a $15 million Series A led by Benchmark’s Peter Fenton.

From Docker to AI: A familiar playbook

Founded in 2023, Ollama simplifies the process of running open-weight AI models on personal computers, reducing setup from hours to minutes. The tool has gained widespread adoption among developers, amassing 176,000 stars and nearly 17,000 forks on GitHub. It now serves over 8.9 million monthly active developers and is used by 85% of Fortune 500 companies, according to Morgan.

The company’s founding team brings relevant experience: Morgan and co-founder Michael Chiang previously built Docker Desktop, a tool that made containerized applications portable across cloud environments. They joined Docker after it acquired their startup Kitematic. Ollama applies a similar abstraction layer to AI models, making them accessible without complex hardware configuration.

“Open models started coming out in 2023 but they were really hard to use,” Morgan said. “They had been geared toward researchers at the time, not programmers. As a result, it was really hard to get them up and running.”

Business model and enterprise traction

Ollama offers a free desktop tool for running local models, alongside a cloud service called neocloud that provides access to larger, more complex models. Subscription tiers range from free to $100 per month, with pricing based on GPU time rather than token limits.

Morgan and Fenton declined to disclose revenue or valuation. However, Morgan noted a turning point in January when open models became capable of agentic tasks like coding, driving enterprise interest in affordable alternatives to closed models such as Anthropic.

“I still think that this is the part that most of the debate gets wrong. It’s not an either/or,” Fenton said of open versus closed AI models. He argues that companies with high inference costs have a “vital existential project” pushing them toward open-weight models.

Open-source tension and community reaction

Not all users have welcomed Ollama’s commercial expansion. About a year ago, criticism emerged on blogs and social media accusing the company of “enshittification” — a term describing the degradation of free tools as companies pursue monetization. Critics worried that the cloud service would divert attention from the free desktop project.

Morgan counters that the cloud offering is a natural extension of the open-source mission. State-of-the-art open models are often too large to run on personal computers, he explained. “So we said, ‘Hey, let’s help find the compute for that.'” Fenton added that “nothing has changed for the core product that’s free on the desktop.”

Broader industry context

Ollama is part of a growing wave of open-source AI projects attracting venture capital. Other examples include inference providers like Inferact (maker of vLLM) and RadixArk (maker of SGLang), as well as startups building their own open models from scratch, such as Arcee. The trend reflects a shift toward affordable, customizable AI tools for enterprises and startups.

Conclusion

With $88 million in total funding and a user base approaching 9 million, Ollama has established itself as a key infrastructure layer for developers working with open AI models. Its growth mirrors the broader industry move toward open-weight solutions, though the company must navigate community skepticism about its commercial direction. The next challenge will be proving that a 14-person team can sustain both its free ecosystem and a growing enterprise cloud business.

FAQs

Q1: What is Ollama?
Ollama is an open-source tool that allows developers to run AI models locally on their PCs, simplifying setup and reducing hardware configuration complexity.

Q2: How much funding has Ollama raised?
Ollama has raised $88 million total, including a $65 million Series B led by Theory Venture and a $15 million Series A led by Benchmark.

Q3: How many users does Ollama have?
Ollama serves over 8.9 million monthly active developers and is used by 85% of Fortune 500 companies.

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