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startups not always set up as C corporations--for instance, if you expect it to be several years before you reach any profitability (happens a lot in biotech),
by taylorwc 14y ago
startups not always set up as C corporations--for instance, if you expect it to be several years before you reach any profitability (happens a lot in biotech), you set up as an LLC to flow losses through to investors for tax purposes. most of these convert to c-corps upon profitability or if there's going to be a major financing event.
- il 14y agoThis might be differet for unsophisticated investors, but I've never seen an experienced technology investor invest in anything other than a C corp. In any case, investors don't want losses to flow through to them. They want losses carried forward to reduce the company's tax liabilty in the future.
- taylorwc 14y agoDepends on the investor, especially if it's an angel group vs. fund. lots of angels want to receive the initial benefit of losses.