Software development - a cautionary tale
A sobering reminder this week about the need to protect source code ownership when setting up in business.
The National Business Review is reporting on the demise of Mosaic Enterprises, a start-up valued at around $5.5 million with contracts in New Zealand and Australia.
But it all came crashing down when planned investment failed to materialise and software developers complained they went unpaid for several months.
By December, they'd had enough and the developers began withholding code from the company owners, demanding backpay before they handed over the code.
Unfortunately that lead to the company failing to deliver updates to key contract holders, and so the financial situation spiralled out of control. The company collapsed earlier this year.
ITP has long promoted the need for software escrow (and indeed, offers exactly that service itself) for any company that is reliant on software produced by third party developers. This goes doubly for start-ups that can operate without significant legal support in this area.
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