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- Need to raise from investors? You probably need a Delaware C-Corp.
Need to raise from investors? You probably need a Delaware C-Corp.
That's it.
Noah Lack
January 17, 2024
Let’s skip the small talk,
A couple of athletes have asked me about startup incorporation, which is still an unclear subject for many first time founders. So I wanted to make this as digestible as possible.
If you will need investment for your startup and will issue equity/shares in return, then you will most likely incorporate as a Delaware C-Corporation. This one of the first questions you may ask in starting a company– there is the answer.
You don’t have to read any further, that is the punchline. I am not here to complicate any of the shit you see online.
If you are still reading, I will explain why.
Your investors, especially Venture Capitalists, want liability protection. A C-Corp does just that.
The state of Delaware is the most founder-friendly state in the country mainly because companies registered in Delaware that don’t operate in the state don’t pay corporate income tax, and shareholders who don’t live here don’t pay tax on shares.
For tech companies, a C-Corp is the way to raise money due to the ease of transactions of shares. Especially in Silicon Valley, most investors will not take you seriously unless you are a Delaware C-Corporation, one of these fancy unwritten rules I’ve learned.
Please consult with a legal confidant on your specific product, but this is how it is.
Some good starting points if you’re looking to incorporate in the near future:
A lawyer