A software license is an agreement between the licensor (the software developer) and the licensee (the user) that allows the licensee to use software (which is protected by common law or registered copyright, or in rare cases a patent). Software licenses generally fall into two categories: proprietary software licenses, and free-and-open source software licenses.
Proprietary software licenses normally take the form of end user license agreements (EULAs) and are often attached to major commercial software, like Microsoft Office or Quickbooks. Typically, proprietary software license only grant the user the right to use the software in a specific way; the ability to modify, copy, or redistribute the software is usually very limited, if allowed at all, and access to the source code is also usually restricted.
Conversely, free-and-open source software licenses give users access to the source code and permit users to use and redistribute software. Some free-and-open source software licenses are known as recursive or copyleft, which require users to release any derivative software under the same license as the original software, whether as a whole (meaning all of the derivative software operates under the same license) or in part (meaning that only the parts of the derivative software that came from the original software still operate under the original license, while the new parts can be licensed in any way). Finally some free-and-open source software licenses allow users to do whatever they want with the software, even including it in new proprietary software (although copyright permissions and credit to the original software’s author usually must be included as well).
If your startup is building new software off of and incorporating free-and-open source software, you will want to check to see what the specific rights and responsibilities of the original software are. You or your developers will want to avoid covering something with a proprietary license that is required by the base software’s license to be covered in part or in total by the original software’s fre-and-open source software license.