Anyone looking to start their own business needs to begin with a robust business plan. If you want to make waves in your chosen industry it is not going to be enough to simply conjure up an idea and run with it, you are going to need to analyse the market, plan your marketing strategy and protect your investment for long term success. One area that entrepreneurs often overlook, to their detriment, is investing in software escrow for their startup business and this simple agreement can have a huge impact on the success of your start up. We have created a guide for would be entrepreneurs everywhere to explain why you need a software escrow agreement and what to consider when getting it.
Plan to succeed
It is widely recognised that software escrow agreements can improve your chances of getting your business off the ground. A staggering 80% of business plans are rejected from the off due to unrealistic business plans and under-prepared business owners. By having an escrow agreement you are signalling to your investors that you are taking your business seriously and are putting measures in place to protect your business critical software and ensure its longevity in the marketplace.
Protecting your investment
Escrow agreements provide you as a new business with security, so should a business critical software supplier fall into financial difficulty, you as a fledgling company are protected and can continue to operate as normal.
Protecting your investors
The biggest risk for investors is that their investment succeeds wildly then is whipped away from them. Escrow agreements eliminate the risk for your investors of you running off with your intellectual property by binding you in a mutual contract so that you both continue to benefit for the length of the contract.
As a new business, you will need to identify exactly what it is you wish to protect and ensure that you have the correct escrow agreement in place. Do you need to protect the source code and information for a bespoke software application with a Single Licensee Escrow Agreement or do you have an ‘off the shelf’ multiple licensed product that is used by many licensees? The software used will have a great impact on the escrow agreement required.
When considering which software escrow provider to use for your startup, it is imperative that you find out what support you will be given in the event of a business critical software emergency. You not only need to know what is protected but how it will be protected and what measures will take place in such an event.
Business start-up’s needs vision and strategic guidance right from the very beginning, and by considering the above factors and getting your software escrow in place you will prove to your investors that you have set your sights high and are rising to meet them.