Setting up a startup involves legal and accounting issues, forming a Delaware corporation is the easiest option, and using services like Clerke can help avoid high stress situations during fundraising.
- Christie and Carolyn discuss the basic legal and accounting issues that startups may face, with the goal of helping founders set up their company in the right way and avoid pain.
- Setting up a company involves protecting assets, raising money, hiring employees, entering into contracts, and discussing issues among founders such as leadership and equity.
- Forming a corporation in Delaware is the easiest and most investor-friendly option due to clear and settled laws and investor comfort with Delaware corporations.
- A company formed as an LLC in Connecticut was advised to convert to Delaware, but a crucial mistake made by the lawyers resulted in the company raising money as a Delaware corporation for a couple of years when it was still a Connecticut LLC, leading to a $500,000 bill for four different law firms.
- To set up a Delaware corporation, fax two pieces of paper to Delaware and complete a set of documents that create a board of directors, officers, and approve the bylaws of the company.
- When incorporating a company, use services like Clerke to set up standard basic documents and keep them in a safe place to avoid high stress situations during due diligence or fundraising.