(of course the other thing that matters a lot here is that dollars are not fungible; grant dollars push you around differently from VC dollars / bootstrap dollars / Patreon dollars…)
Conversation
I can appreciate an argument that VCs may be less willing to fund a project whose code is open source, though I have a hard time imagining this being a/the deciding factor.
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Venture funding requires that projects be able to produce (lots of) revenue. It is of course possible to produce revenue with OSS, but it's not the norm, and it requires thoughtful strategy. If you have such a strategy, great!
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You also need to explain why your future closed-source competitor, which can leverage your work for free, will not simply eat you. There are approaches for this, too, but again, you'd better have an explicit strategy.
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Why shouldn't they?
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You won't get funded if it seems likely that they will, so you won't produce transformative insight. If you get funded anyway, you have repeated games to worry about.
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I think I have to agree that there can be additional challenges (e.g. funding) with a project which has its source open source. Closing source is a defense mechanism.
I am willing to admit I may have bias; I've seen many open source projects succeed in my bubble.
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Succeed to the level that they can spend millions per year on team indefinitely long into the future?
Only ones I've seen like that had ICOs
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There are lots of examples which meet this bar, but they all have carefully-crafted strategies for the relationship between OSS and their business. See this index:
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Yeah. Happily for the ecosystem, in the case of 2), those companies have all become major contributors to the original projects.