This is often the move when the team's spent the money developing something and now the end's in sight, so they want the chance to leave and take the code with them.
Don't know if this is that at all, but it's always worth considering.
That is almost certainly what’s happening here. They raised $3M three years ago, at the peak of evaluations, and don’t have the metrics to raise a Series A in the current climate. Running out of money and want to leave some artifact behind. A very difficult and emotional transition.
You can look at the history of Erlang for a similar example. A very crude summary could be that Ericsson developed the language, took it to production, and then they decided to replace it with Java. The people that did the language design convinced management to release Erlang and the VM as FOSS, and then they promptly went and started a company that could use the tooling they'd developed.
I'm aware I'm leaving out a lot of detail, but it's not clear to me what has become public knowledge and what has not and I happen to know some people that were involved.
Would open sourcing the core IP of a company “typically” require board approval?
If a company goes under, the investors will want to sell off the IP, open sourcing everything would make that IP less valueable. There must be some blanket clause in the term sheet to cover that, right? Ie: founders won’t do anything which will materially hurt the company without board approval (or something, I am no where close to a lawyer, this is all conjecture)
If it mattered it would have become part of VC contracts years ago.
Early stage VCs make money on the big winners, not on the tail end of companies that don’t exit for 100x. For the most part, except for patents the IP is worth less than the Aeron chairs at the end.
Don't know if this is that at all, but it's always worth considering.