Unless the company is only in Delaware, forming a Delaware corporation causes it to have at least two different sets of tax laws to contend with. As startups ar

Unless the company is only in Delaware, forming a Delaware corporation causes it to have at least two different sets of tax laws to contend with. As startups are typically not in a very strong financial position, chances are that for most start ups such a choice is introducing pointless and worse potentially very costly complications. For example, a company that registers as a Delaware corporation but spends any time in Calofrnia conducting or operating its business (e.g. for YCombinator) almost certainly has to register as a foreign corporation in California and pay the minimum franchise tax. They'd have to pay the same as a corporation registered within CA (not as a foreign entity). So the Delaware incorporation is just an added legal and financial complexity with what is very likely little or no benefit (i.e. asinine).