Why Does Software Escrow Matter to Investors?
Published on 21/05/2025
Software Escrow is an established risk mitigation tool. Whilst it is recognised for being a tried and tested means of safeguarding critical business applications, it can also be utilised for safeguarding technology investments. This blog will explore the benefits of Software Escrow for investors.
The structure of an Investor Software Escrow Solution involves a licensor (the software developer), a licensee, and a neutral third-party Escrow agent, such as SES Secure. Within the realm of investment, the licensee in a Software Escrow Solution is likely to be the investor or their portfolio company.
The process would involve a developer depositing source code, documentation, and other relevant materials with the Escrow agent. At SES, once these materials have been provided, they are thoroughly tested by our team of technological experts to ensure that they are accurate, reliable, and can be successfully redeployed. The materials would only be released when specific release conditions have been met, such as a developer going bankrupt or failing to maintain their software services.
The Benefits of Investor Software Escrow
There are various ways in which Investor Escrow can provide value to the parties involved, such as:
Protecting Capital
It’s common for investors to fund companies whose core value lies in proprietary software. If a situation were to arise in which a software developer fails, the software could lose its function. In this kind of scenario, an Investor Software Escrow Solution would enable continued access to the source code, protecting the investment.
Due Diligence
During due diligence procedures, an investment can utilise an addition layer of assurance through Investor Escrow. Software Escrow for investors can be used to verify that software is fully functional and correctly documented.
Business Continuity
This is one of if not the most recognised benefit of having a Software Escrow Solution in place. Investors can take comfort in knowing that is a software provider ceases operations, they or the acquiring company can still maintain and operate the software, ensuring the continuity of operations.
Mergers & Acquisitions
Software Escrow for investors can support the validation of the software assets being acquired in M&A cases. This reduces the level of legal and operational risk.
IP Security
The Investor Escrow process ensures that intellectual property (IP) is securely held and can be transferred if needed, which is especially important in situations involving high-risk or single-lender investments.
How Can SES Secure Support Investors?
For over 25 years, our team has been providing innovative Software Escrow and SaaS Escrow Solutions to clients from a vast range of industries and sectors. Throughout this time, we have continuously grown and adapted in line with the latest advancements.
Every Software Escrow Solution is completely bespoke and customised to meet the needs, preferences, and specifications of clients. All agreements are carefully aligned with investor risk profiles. Additionally, our client process includes automated code verification and technical validation to ensure software integrity.
Multi-party access protocols are also offered by us. This supports seamless transitions during vendor failure. Further to this, our team are also experts in compliance with legal frameworks and are able to provide reliable guidance on such matters.
Want to learn more about Investor Escrow? Please don’t hesitate to get in touch with our team.