Why you might consider a Delaware Corporation over an LLC [Video]

One of the first decisions a business will make is should they form as a corporation or LLC. There is a big misunderstanding among companies that are looking for venture and angel capital. If a company is seeking institutional investment whether that is from venture or angel investors, 99% of the time, the company should be formed as a Delaware C-Corporation.

Many companies get advice early on that forming their company as an LLC is easier and will save them money. However, companies that begin as LLCs will often need to go through a reorganization process down the line when they start to fundraise. Most venture and angel capital groups will steer clear of LLCs.

We discuss four reasons why this is the case.

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About Mark: Mark Graffagnini is the founder and Managing Partner of Cara Stone, LLP, a national law firm focused on transactional law, securities, and corporate litigation. Mark has been selected as a “Super Lawyer” in the field of securities law for multiple years in a row and has significant experience representing public and private companies. Mark represents clients through various rounds of financing, exit, crisis management, and scale. Mark has lead numerous exits for clients from mergers and acquisitions to IPO. Mark leads multiple venture stage deals a year, and Cara Stone has represented companies and investors in over $1 Billion in transactions.

About Cara Stone, LLP: Cara Stone, LLP (“Cara Stone”) is widely considered to be a top law firm in the realm of angel and venture capital and private equity. The firm is a leading capital markets law firms in the U.S. Cara Stone has lead approximately $1 billion worth of private equity transactions including one of the largest going public deals for a non-Silicon Valley tech company in 2018. The firm is seeking to expand to emerging capital markets to help those ecosystems develop stronger entrepreneurial systems and to continue to help the best companies in the small and mid-sized markets find capital, grow, and exit. Follow Cara Stone on Instagram (@CaraStone,LLP) or visit us at carastone.com to learn more.

Disclaimer: This video discusses general legal issues, but it does not constitute legal advice in any respect. This post is not a substitute for legal advice and is intended to generate discussion of various issues. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel. Cara Stone, LLP and the author expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this post. The views expressed herein are personal opinion.