Unfortunately, hasty deal making and the need for capital gets the better of a thorough examination of the IP. The founders usually do not care that much. The VCs are confident to get over certain glitches by making changes to their boiler plate guarantee provisions. At the end of the day deals get closed and the IP problems are deferred to later rounds.
However, what might work well for seed investments or Series A rounds might not be sufficient in subsequent rounds. At that stage a lot more money comes to the table. The downside for investors gets much bigger. They will be more reluctant to accept guarantees but want solid IP protection instead.
Deferring IP issues works against early stage VCs and founders alike and endangers follow-on financing. So, this is my little piece of advice: From the word go founders should make sure that the IP lies with them or rather the company (= the target). I hope that my little checklist gives some indication of what to look at and which steps to take.
- inhouse software and database development via all employment contracts
- third party software and database development via all development contracts or freelancer contracts
5. standard software used by target and licencing agreements
6. open source software used by target and licencing agreements