Comments on: Why the Corporation is King for Getting Venture Capital

By: The Checklist Every Entrepreneur Should Read Before Launching a Startup

The Checklist Every Entrepreneur Should Read Before Launching a Startup — Mon, 12 Sep 2011 14:37:15 +0000

[...] Here’s what I’d do in the beginning: Incorporation 1. Entity Choice: Corporation or Corporation 2. State of Incorporation: Delaware 3. Authorized Shares in Charter: 10,000,000 Shares 4. Type of [...]

By: If I Launched a Startup | Bookmarks

If I Launched a Startup | Bookmarks — Wed, 16 Feb 2011 13:57:44 +0000

[...] Here’s what I’d do in the beginning:Incorporation(1) Entity Choice: Corporation or Corporation(2) State of Incorporation: Delaware(3) Authorized Shares in Charter: 10,000,000 Shares(4) Type of [...]

By: Adam

Adam — Fri, 04 Feb 2011 16:22:46 +0000

I am planning to start an entity with one other person. The plan is to self-fund it (~$100K for marketing, external consulting costs, operating expenses), and with this, we think we can develop a product that should produce reasonable recurring revenue. The hope is not to have to raise additional money, but of course, we may need to at some point. If successful in the market, we may also become an acquisition target for larger companies in a similar space. Questions: Corporation for our self-funded entity, or LLC? If we sell in 2 years, we’d like to be able to receive long-term capital gains treatment (83b election), but I don’t think we can do this with an LLC? But we like the flexibility and simplicity of an LLC and are worried about “double tax” of a C-Corp. Thoughts?

By: Shelby Clark

Shelby Clark — Sat, 08 Aug 2009 11:09:16 +0000

Hi there- This is a great article! I'm an entrepreneur, planning to raise VC for a venture based in San Francisco. Should I register my company in DE or CA?

By: Shelby Clark

Shelby Clark — Sat, 08 Aug 2009 11:09:00 +0000

Hi there- This is a great article! I'm an entrepreneur, planning to raise VC for a venture based in San Francisco. Should I register my company in DE or CA?

By: Ben

Ben — Thu, 02 Jul 2009 18:09:31 +0000

How come no one talks about the tax issues on a pre-funding buyout? Or even post funding buy-out with no substantial profit (loss carryover in c-corp is not significant compare to the buyout value) which won't get passed to the investors in a LLC or S-Corp status?

Seems like most of the focus were put on the funding campaign rather than exit?

By: Ben

Ben — Thu, 02 Jul 2009 18:09:00 +0000

Seems like most of the focus were put on the funding campaign rather than exit?

By: Timothy

Timothy — Sun, 25 Jan 2009 22:18:54 +0000

hi,

Concerns, if I need capital, from share sales, but in my c-corporation I don't want a board, I need 5000-10000 shares. How can start a c-corporation, sale shares, and not have to worry about a board. Is it possible to open a c-corporaton have 5000-10000 shares, wout a board. Please reply

By: Timothy

Timothy — Sun, 25 Jan 2009 22:18:00 +0000

hi,

By: Ryan Roberts

Ryan Roberts — Mon, 03 Nov 2008 15:34:13 +0000

I would convert, but I’m not familiar with FL law.

By: Vance

Vance — Wed, 29 Oct 2008 16:29:12 +0000

I have a new LLC without any owners except myself, not Articles, etc.. Is there an easy way (Florida) to convert it to a C-Corp, or is it easier to just set up a new C-Corp?? I didn't think I would need shares, but now I do.

By: Vance

Vance — Wed, 29 Oct 2008 16:29:00 +0000

By: Review of Y Combinator Angel Investor Series AA Legal Documents | The Startup Lawyer

Mon, 25 Aug 2008 14:49:32 +0000

[...] capital. I have written a few posts about “Why Incorporate in Delaware?” and “Why a Corporation for Venture Capital?” explaining the subject. Of course, the Series AA documents aren’t for venture capital [...]

By: Ryan Roberts

Ryan Roberts — Sun, 20 Jul 2008 16:10:10 +0000

I always believe one should have a compelling reason to incorporate (rather than qualify as a foreign entity) in a different state than the home state. I'm not quite sure those reasons are compelling. But then again I'm not familiar with the pros/cons of a FL incorporation.

By: Ryan Roberts

Ryan Roberts — Sun, 20 Jul 2008 16:10:00 +0000

By: Dave

Dave — Sat, 19 Jul 2008 16:06:07 +0000

If it helps to clarify, we plan to incorporate in Florida. Although we are not based in Florida, I from Florida and have many "agents" there. Would you generally not recommend this approach?

Thanks again!

By: Dave

Dave — Sat, 19 Jul 2008 16:06:00 +0000

If it helps to clarify, we plan to incorporate in Florida. Although we are not based in Florida, I from Florida and have many "agents" there. Would you generally not recommend this approach?

Thanks again!

By: Ryan Roberts

Ryan Roberts — Fri, 18 Jul 2008 09:10:27 +0000

Dave,

Your main issues will likely be tax related: making sure the conversion is tax-free, capital account issues, and other debt-related issues. Thus, it would be wise to get a good CPA from start and let him or her know your plans to eventually convert and raise capital.

Of course, there could be an issue with getting the necessary consent from the llc members for the conversion. For example, Texas requires that a conversion by approved "as required by (1) the laws of the jurisdiction of formation and (2) the governing documents of the converting entity." Thus, sometimes llc agreements (governing docs) or the statutes require unanimous approval for a conversion.

Additionally, if you are going to convert a non-Delaware LLC to a Delaware C Corp, you will also have to comply with Delaware's requirements (Section 264 of Delaware's General Corporation Law for LLCs wanting to convert to Corporations) in addition to your current state's requirements.

By: Ryan Roberts

Ryan Roberts — Fri, 18 Jul 2008 09:10:00 +0000

Dave,

By: Dave

Dave — Thu, 17 Jul 2008 16:56:03 +0000

Hi,

Great article! We are starting a web site but really do not plan to go after VC for at least 6-8 months, and probably not for a year. In this first year we will mainly be dealing with angels. We are pretty much set to start the LLC working under the assumption that we can convert it to a C Corp when we decide to go after VC. Does this make sense?

Thanks again!