4 ms·
Ask HN: The cost of incorporating and drafting safe notes, $15k?
Hello,
We have an early startup and we need to incorporate as a C-corp and draft safe notes to raise a sum of $1M in funding. We came across a law firm that is willing to defer payments but they say all of that will cost some $15k.
Does anyone know how much it costs to create an investors-ready C-Corp and draft a safe note?
- davismwfl 9y agoAssuming a delaware corp and foreign registration in your home state, just say roughly $1,000-$1,500 if going through an attorney for that part. Stripe has Atlas which I think does most of that for $500, but I don't think includes some of the state fees, so probably a little more. The SAFE note, should be able to be taken to an attorney and have needed details filled in and revised based on your specific situation. I would expect that to be less than $2k in general. That would be roughly 6-10 hrs of attorney/paralegal time generally which seems adequate to make modifications. $15k seems high to me for just incorporating and modifying the SAFE note. However, $15k in legal fees to raise $1M doesn't seem totally out of line. e.g. closing documents, due diligence support etc. Make sure you know what it is covering and not covering, because that makes a huge difference in whether it is reasonable or not. Also your location makes a huge impact on this as well as the law firms reputation and history of doing this stuff.
- somid3 9y agoThis is great feedback, thank you!
- jasonshen 9y agoThat seems on the high side. Incorporating on Clerky is under $2k and I would expect SAFE notes to be pretty easy to draft compared to even say a Convertible Note which I would still imagine to be under $10k. Try to negotiate.
- rajacombinator 9y agoLol! You can self incorporate for about 500 (plus ~500-1k/yr in taxes), and the SAFE note is available free online just fill in the blanks yourself. If you already have people willing to shell out $1M then I guess it’s no biggie to waste 15k on a lawyer. Not sure what the market is like today but a $1M raise used to be priced round material, seems a bit much for a SAFE. If you don’t have the $1M yet, don’t waste your time and money.