IBM woos start-ups

Company unveils cross-licensing program for venture capitalists and their portfolio companies.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
IBM on Tuesday unveiled a specially tailored cross-licensing program for venture capitalists and their start-ups, as it seeks to populate emerging businesses with its technology.

Under the IBM Ventures in Collaboration program, venture capital firms and their portfolio companies will have access to a two-tiered licensing program. The program is designed to lower licensing costs for IBM products and simplify the licensing process for young companies.

Start-ups with annual revenues under $10 million will receive a standard, three-year cross-licensing contract for $25,000, said Michelle McIntyre, a spokeswoman for IBM Venture Capital Group.

Companies with more than $10 million in annual revenues that are in the process of bringing their products to market receive a custom, five-year cross-licensing contract and pay 1 percent in royalties. There is no revenue cap on a company's eligibility, McIntyre said.

"This program will remove the barriers faced by early-staged, VC-backed companies, and provide them with an opportunity to access IBM's...patent vault," Claudia Fan Munce, managing director of IBM Venture Capital Group, said in a statement.

The program is initially open to IBM's 150 venture capital partners, but Big Blue is willing to discuss the program with start-ups outside its VC network, McIntryre said. Some of the participating VCs include Walden International, U.S. Venture Partners and 3i.

Big Blue's cross-licensing program is the company's latest effort to strengthen its relationship with young companies in the hope that its software and hardware will be used in a start-up's emerging products. The relationship also provides IBM with a glimpse of emerging technology trends.

IBM's approach is also different from those of other Fortune 500 companies. It spends less time making direct investments in start-ups as a strategic partner and instead invests in funds run by venture capitalists. Last year, for example, Big Blue invested more than $20 million in funds run by venture capitalists.