Except, it’s time to normalize not doing a Delaware corporation to raise capital. Plenty of other choices and many are better suited for the modern world than Delaware.
One lesson YC taught founders back in 2012: innovate within your product. Don’t innovate with things like HR, legal, corporate structures, etc. Focus your innovative energy where it matters: your product.
Startups don’t fail because they chose to not innovate when setting up their corporate structure. They fail when they can’t build a product worth money to other people.
Having an innovative or non-standard corporate structure (basically anything other than Delaware c-corp) will cause headaches and even once you’re successful, will make a lot of things more difficult. Harder (more expensive) to find lawyers, harder (more expensive) to find accountants, and it will be an issue if you are getting acquired or raising money.
I don’t disagree there might be viable alternatives. But most founders shouldn’t be trailblazing a new path with an innovative corporate set up. Just do what everyone else does and put your focus where it matters.
I’m curious why anyone wouldn’t default to Delaware c-corp for the typical startup raising capital. What’s the gain?
There are at least 54 other jurisdictions within the US alone that have incorporation statutes. Those legislatures and courts haven’t all sat still for the last 30 years, they compete directly with Delaware, other countries and each other.
Delaware’s Court of Chancery, a business court, is replicated is some other states, Wyoming has one. Whether a jurisdiction has that or not, a huuuge benefit is that outside of Delaware you can relitigate cases and argue for the exact opposite outcome as to whatever case law Delaware judges are bound by.
Back to the “for who” question, some things benefit your investors more than you.
Its all a reading comprehension problem.
Currently I like South Dakota for Trusts, Wyoming for LLCs, I still like Delaware for C-Corps, and Delaware for non-profit corporations
> a huuuge benefit is that outside of Delaware you can relitigate cases and argue for the exact opposite outcome as to whatever case law Delaware judges are bound by.
How come this is a benefit? Unless you know ahead of time what conflict you are going to be in court about this seems 50/50 whether it will benefit you or the person suing you/being sued by you.
Plan it out, much of case law is happenstance that has little to do with modern realities, in a court system less bound to another court system they’ll take a fresh look
Your ability to plan it out most likely it won’t be on your first venture
I live in Wyoming. If you want outside capital or sell your company, do a Delaware. There are economies of scale at every step that make it the vastly smarter choice. If you’re doing a small business, sure, do a local entity.
Most funds are LLCs or LPs. They’re almost always in Delaware. Non-Delaware U.S. funds trade at a discount. (International are B.V.I. or Cayman. For Europe, Luxembourg.)
> There are at least 54 other jurisdictions within the US alone that have incorporation statutes. Those legislatures and courts haven’t all sat still for the last 30 years, they compete directly with Delaware, other countries and each other.
No other jurisdiction really competes with Delaware. It's got a robust body of case law and everyone knows what to expect.
> Except, it’s time to normalize not doing a Delaware corporation to raise capital.
Is that really common for people to do in EMEA? I thought that was a US thingy they teach you at startup schools/incubators. AFAIK, EMEA founders setup their company in their respective countries.
