About to start building a product and another small but successful startup offers an API that would give us a core piece of functionality we are looking for. They aren't really a direct competitor so partnering with them could lead to building some great relationships in our space. On the other hand it leaves us kind of vulnerable, knowing how fast a company like this can pivot and leave us on the dust. Any insight would be helpful!
So the question is what are your "Plan B" options. Let's assume for a sake of argument you've weighed the options (build your own, buy from an established competitor, partner with this startup) and you've decided that partnering is the best option. One way you could protect yourself in the event this company either shuts down or pivots and no longer supports what you need, you could negotiate to have the code put in an escrow account that has triggers to release the code to you. You of course will be restricted to the usage (e.g. you couldn't take it and compete). I've used escrow agreements in past deals and can discuss the details if your interested. Caveat, I'm not an attorney so can only provide business advice. Good Luck!
Answered 9 years ago
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