Open Source Software Startup Program

UC Berkeley’s open source culture has fostered a remarkable track record of developing innovative software, open source-licensing commercial use of the software, and spinning-out companies that successfully leverage the software. The campus’s software projects and related startup companies have created products and entire industries that address societal problems or technological opportunities in ways that have improved our quality of life and driven economic vitality.

The Open Source Software Startup Program

UC Berkeley’s thriving open source community continues to generate significant opportunities for innovation and entrepreneurship. To help advance this potential, the campus established the Open Source Software Startup (OS3) Program. The program leverages the success of UC Berkeley’s OS3 companies to help fund the academic research and education that fuel future innovation.

The Foundation of OS3: The Good Standing Agreement

The core of the OS3 Program^[i] is an Open Source Software Good-Standing Agreement (pdf).

Written Confirmation that De-Risks Commercialization

UC Berkeley’s newly incorporated OS3 companies that optionally decide to enter into this simple, non-cash agreement can benefit from the agreement’s written confirmation that the university agreed to release particular software under an open source license; and accordingly, the company’s leveraging of the software is consistent with the mission of the university. (However, the agreement is explicitly not a University of California endorsement of any company or product.)

This confirmation in writing can help startups with investors, corporate partners, strategic customers, and key hires because the statement can de-risk the possibility of a future copyright-related conflict between the company and the university.

The Good-Standing Agreement also acknowledges UC Berkeley’s:

role in fostering the development of the particular software and startup,
willingness to open source license the software’s copyright, and
written statement of good-standing. In recognition of these benefits, the Good-Standing Agreement grants the university 1% of the newly incorporated company’s stock, and the right to invest in the company’s future rounds of funding (on the same terms as other investors up to its initial 1% ownership).[ii]

A Shared Vision for Sustaining Future Open Source Innovation

The vision of the OS3 Program is that all UC Berkeley OS3 startups enthusiastically and proactively enter into the OS3 Good-Standing Agreement in order to help the campus fund academic research and education that will catalyze future OS3 opportunities.

Notes

The OS3 Program’s activities include: (1) popularizing and executing the OS3 Good-Standing Agreement, (2) administering the agreements’ resulting stock equity and investment purchase rights – including potential assignment of purchase rights to VCs; and (3) potentially structuring the assignment of the purchase rights in ways that foster early investments in OS3 startups (before their purchase rights become valuable).
Including investment purchase rights in this agreement is a win-win for the company and university. To be clear, this right is not a grant of future stock to the university. Instead, it enables the university (or its assignees) to invest in the company under the same terms as other investors. This investment participation right has emerged as an industry norm – as exemplified by the participation rights in Stanford agreement template. The default hierarchy for exercising the participation rights is: first, UC Berkeley's Venture Capital Services; second, affiliated funds

Examples of Open Source Software Developed at UC Berkeley That Have Powered Successful UC Berkeley Spinout Companies