What I find confusing is why a big upfront investment is necessary merely to start the project and, perhaps more importantly, why it wouldn't be a true open source project and only open sourced at the end. Why not open source what they have already and see if it sells itself by attracting collaborators?
It's not clear from the page or the video if they've open sourced the work done on the prototype already, but if they have and people are already playing with it and seeing promise, it becomes a much easier sell. Many good open source projects got significant sponsorship or raised money for people to work on them after initially proving itself, and that's great.
Or maybe the lines between a startup and an OSS project are just being blurred in some weird new way.
[1] http://queue.acm.org/detail.cfm?id=2349257
[2] http://en.wikipedia.org/wiki/The_Mythical_Man-Month#The_surg...
A response from the people running the project leads me to believe this is true. Essentially it seems they're seeking funding for their product but the open sourcing of the project is a big cherry on top (rather than it being purely an "open source project").