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Doubtful — in general, company and investor-side counsel alike view Delaware courts as reasonable and fair. From what I've seen, the people that have a gripe w
by swampthing 3y ago
Doubtful — in general, company and investor-side counsel alike view Delaware courts as reasonable and fair. From what I've seen, the people that have a gripe with Delaware courts are usually activists of some sort.
The framing of VCs / board versus founders / shareholders doesn't make sense to me because so many startups have founders controlling the board. And VCs are shareholders too, of course.
I think what you may be referring to is that the Delaware courts generally give the company management broad discretion over business decisions. So it's difficult for a random shareholder to successfully sue the company over some bad decision they made. But as a founder, that's what you want, so you can run your startup without having to worry about backseat drivers.
- hobobaggins 3y ago> From what I've seen, the people that have a gripe with Delaware courts are usually activists of some sort. For the record, I'm not an activist, if that's what you're saying. I just don't see that the benefits (which seem to be very hard for anyone to quantify) of being in Delaware even come close to comparing to the opportunity or actual costs of not being in a far more business- and tax-friendly state like Wyoming, Texas, or Florida.
- swampthing 3y agoOh, sorry, I didn't mean to imply you were an activist — only attempting to explain why you might see some people complain about Delaware courts. This handbook actually contains a lengthy discussion of why startups choose to incorporate in Delaware: https://handbooks.clerky.com/startup-incorporation/where https://handbooks.clerky.com/startup-incorporation/where :)