VCs and their lawyers prefer Delaware incorporations because everything's business-friendly, there's well-established case law, and therefore things like financings are easier to do.
That's only part of what he says, and the rest doesn't seem really valid to me.
He said:
>1. Flexible Laws.
Yes, this is slightly more attractive for VCs. But I imagine, unless you are in an odd state, that VCs can handle corporations incorporated in, say, California.
>2. No Wildcard Juries.
If you're sued in Delaware, which you don't have to be.
>3. Precedence = Less Litigation.
Ditto.
>4. It’s Free! (Well, almost)
Foreign corporation registration may end up making it more expensive.
> A little bit cheaper than California ($100..but they nail you for $800 every year in franchise fees)
You don't get out of California franchise fees by incorporating somewhere else. See California's Franchise Tax Board document FTB 1063.
>5. Privacy
Since you may have to register as a foreign corporation, this anonymity in Delaware may be moot.
Comments
He's assuming you're going to raise money.
VCs and their lawyers prefer Delaware incorporations because everything's business-friendly, there's well-established case law, and therefore things like financings are easier to do.
That's only part of what he says, and the rest doesn't seem really valid to me.
He said:
>1. Flexible Laws.
Yes, this is slightly more attractive for VCs. But I imagine, unless you are in an odd state, that VCs can handle corporations incorporated in, say, California.
>2. No Wildcard Juries.
If you're sued in Delaware, which you don't have to be.
>3. Precedence = Less Litigation.
Ditto.
>4. It’s Free! (Well, almost)
Foreign corporation registration may end up making it more expensive.
> A little bit cheaper than California ($100..but they nail you for $800 every year in franchise fees)
You don't get out of California franchise fees by incorporating somewhere else. See California's Franchise Tax Board document FTB 1063.
>5. Privacy
Since you may have to register as a foreign corporation, this anonymity in Delaware may be moot.
What if you live outside of the US?