Without naming either company involved, two companies from Stanford started approximately simultaneously with pretty much the same vision. One group spent months (literally) drafting employment and consultant agreements, filing patents and trademarks, setting up various shell corporations to shield themselves from liability, etc etc and then hired an offshore development team to build the product.

The other guys just built the thing, only coding and talking to users, and were delighted to find that everything else could be done retroactively. They had tons of happy users before the first guys had anything but a gigantic stack of legal documents, nicely written but protecting nothing.

By the time they pitched the same VC, company B had probably a 1000x lead in user traction, with a growing spread. Easy decision for the VC firm. A is dead; B is a massive success.

Imagine if startup A joined startup B to provide their IP management processes. Don't discount the skills and value-adding that startup A would have learnt for their next startup or providing these services to other startups.

Or maybe they would have distracted startup B and they would've both failed. Doing everything really isn't an option, so you had better pick the one thing that really matters.

We don't know that the folks in startup A learned anythinguseful. We also don't know that A's processes or paperwork can provide any benefit to startup B, let alone if A is willing to sell for a lower price than B can get them from elsewhere.

If A's processes and paperwork are valuable to other startups, A should be selling them itself. (B has a biz, and it's not processes and paperwork.)