CONFIDENTIAL: For BigTech Eyes Only
Since this is the first startup by Baker and Carter, the position of BigTech is that a licensing relationship will prevent waste of the Core IP and prohibit Baker and Carter from disposing of the Core IP if Baker and Carter are unable to run the business. This relationship was fundamental to BigTech permitting Baker and Carter to leave BigTech to form NewCo, as such it is non-negotiable. However, it is not inevitable that BigTech’s Core IP will always and necessarily be the foundational IP for NewCo’s business. Indeed, NewCo will need to do significant development of the Core IP for it to work on a commercial scale.
BigTech is concerned about the inexperience of NewCo’s founders in running their own enterprise. While they were wonderful R&D managers for such a large company, they have no experience running a company. BigTech would like to require NewCo that bring someone on with more experience in the startup environment.
BigTech themselves might be interested in putting more money into NewCo if development continues on its promising track. In any event, the executives at BigTech have contacts at a variety of Venture Capital firms that might be able to provide larger funding rounds to NewCo rather than NewCo’s proposed piecemeal angel investments.