IBM unveils a cross-licensing program for venture capitalists

With an aim to populate emerging businesses with its technology, IBM on Tuesday introduced an expressly designed a two tiered licensing program for venture capital firms and their portfolio companies. The program is designed to lower licensing costs for IBM products and simplify the licensing process for young companies.

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

With Big Blue's licensing program as the company's latest endaevor to strenghten its relationship with companies, the company hopes 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 instance, Big Blue invested more than $20 million in funds run by venture capitalists.