Subscription Services Agreement vs. EULA. Which Agreement Do I Need?

May 7, 2010

When working with the OpenView portfolio of expansion stage companies, I sometimes run into the issue of “Do I need a Subscription Services Agreement or End User License Agreement (EULA)?” It is pretty easy, as it all depends on the primary item provided. Let me explain. 

If a company is trying to define their model in their end user agreement and are unsure of the form agreement to start with, they should figure out if there is any software downloaded by the users, or if they are only providing software-as-a-service through a browser. While many companies are hybrids (some services and some downloaded software) I think it should be viewed as what is the company primarily providing.

  • If they are primarily providing software through a browser, but there is some software downloaded (think Go-to-Meeting or Webex), then they would need a Subscription Services Agreement, as they really are in the SAAS business.
  • However, if they are primarily providing software which will be downloaded, but there are some services provided (maybe support/maintenance/training/some services through the web), then they would need a EULA, as they are licensing their a software.  

Every company looking to raise venture capital funding should figure out which form of end user agreement they need, as if they work with any top venture capital firm, they will be asked about it. 

President and Shareholder

<strong>Jeremy Aber</strong> consults OpenView portfolio companies on legal and contract matters. Jeremy runs his own IT focused law firm, the <a href="http://www.aberlawfirm.com/">Aber Law Firm</a>, and has over 18 years experience in technology and corporate law.