Nov 4, 2009

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Why do VCs want a representation that I am not using "open source" software?

Although open source software is readily available so that it may seem that it can be copied and used without restriction, in fact most developers of open source software claim copyright ownership in the software and place restrictions on the way it can be copied and distributed. VCs are concerned that many software developers incorporate open source software into their products without giving careful consideration to the licensing terms attached to the software. This means that start-up companies that have not been careful about their use of open source software may not be able to distribute their products commercially without infringing the rights of third parties. A representation that you are not using open source software requires you to disclose any open source software that you are using, and enables a VC to scrutinize your compliance with open source licensing terms.

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