Why your startup should be a Delaware C-Corp, not an LLC
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Why your startup should be a Delaware C-Corp, not an LLC
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Re: Why your startup should be a Delaware C-Corp, not an LLC
#2I wonder when we will be able to integrate blockchain based entities like Aragon into the startup economy:
We haven't seen things like the first acquisition, the first bankruptcy, mergers, etc . . . and don't even know if those things are exactly possible as we conceive of them today.
Re: Why your startup should be a Delaware C-Corp, not an LLC
#3Why no mention of S-Corp?
Re: Why your startup should be a Delaware C-Corp, not an LLC
#4Why no mention of S-Corp?
S-Corp is a pass-thru, so not acceptable to take outside money. The investor wants a C-corp. But home State or Deleware is debatable. I chose home State vs Delaware for tax reasons
Re: Why your startup should be a Delaware C-Corp, not an LLC
#5You can divide equity and issue incentive equity compensation at an LLC easily --- for less money than it takes to properly incorporate a Delaware C Corporation. We have an LLC with multiple classes of stock and vesting, and it took just a 20 minute call with our lawyer to get there. Our last company, Matasano, was an LLC for its entire lifespan (we eventually filed taxes as an S-Corp, but never reincorporated). LLCs work just fine.
You'll need a C Corp when you raise funds. But if you're not doing that right now, it takes less than an hour to get a Delaware LLC on the Internet, and you might as well just do that.
Re: Why your startup should be a Delaware C-Corp, not an LLC
#6I wonder when we will be able to integrate blockchain based entities like Aragon into the startup economy: https://aragon.one/ We haven't seen things like the first acquisition, the first bankruptcy, mergers, etc . . . and don't even know if those things are exactly possible as we conceive of them today.
That sounds like a category error.
Your individual and/or corporate actions happen in a legal jurisdiction - technology does not change that.
Re: Why your startup should be a Delaware C-Corp, not an LLC
#7Why no mention of S-Corp?
IANAL, but I'd imagine being limited to one class of stock would really shoot you in the foot for fundraising (no preferred stock for investors, etc.)
Re: Why your startup should be a Delaware C-Corp, not an LLC
#8You can divide equity and issue incentive equity compensation at an LLC easily --- for less money than it takes to properly incorporate a Delaware C Corporation. We have an LLC with multiple classes of stock and vesting, and it took just a 20 minute call with our lawyer to get there. Our last company, Matasano, was an LLC for its entire lifespan (we eventually filed taxes as an S-Corp, but never reincorporated). LLCs…
It's pretty quick to set up a C-Corp too—it's much, much more annoying to change the LLC into a C-Corp when you do want to fundraise.
Re: Why your startup should be a Delaware C-Corp, not an LLC
#9You can divide equity and issue incentive equity compensation at an LLC easily --- for less money than it takes to properly incorporate a Delaware C Corporation. We have an LLC with multiple classes of stock and vesting, and it took just a 20 minute call with our lawyer to get there. Our last company, Matasano, was an LLC for its entire lifespan (we eventually filed taxes as an S-Corp, but never reincorporated). LLCs…
It's pretty quick to set up a C-Corp too—it's much, much more annoying to change the LLC into a C-Corp when you do want to fundraise.
I've never done that, but that's not the advice I've gotten from lawyers. In particular, what I've been told is that C-Corp or LLC, there's going to be annoying conversion work at your first VC round.
Re: Why your startup should be a Delaware C-Corp, not an LLC
#10Fun thing about Delaware: they have an equity court run by the state that functions as a secret arbitration panel. But instead of ruling in line with the law, they rule in line with what's deemed "fair," hence the name "equity court."
Unfortunately we don't know how they rule so we can't run statistics on it. But if anyone would like to leak a data set, feel free to leave me a message in this thread