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Re:Ask HN: Start Up Advice Desperately Needed. by aorshan on Friday February 03, 2012 @04:14PM (#3549038)
I know this is a super cliche piece of advice, but a bird in hand is better than two in the bush.

Seems to me you would be best off trying to negotiate as short of an exclusivity period as possible and then working with the small company to improve your product.

Re:Ask HN: Start Up Advice Desperately Needed. by Prizzle on Tuesday February 07, 2012 @10:12AM (#3562034)
Exclusivity is always negotiable – length of agreement, type of exclusivity, comparative solutions etc. Non-Competitive clauses may help you reduce risk if your product functionality, as-is, is not exactly what they intend to use and redistribute.

I would push back on exclusivity, if not you can reduce the length of the agreement and maybe include the rights of the IP from the final product will be owned your organisation and licensed back to them.