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1. No VC will not give you a term sheet - probably true (so long as you don't tell them about all the time / money you spent trying to optimize your legal stru

1. No VC will not give you a term sheet - probably true (so long as you don't tell them about all the time / money you spent trying to optimize your legal structure for what they would consider to be the failure case). But there's this concept called "deal risk" - the longer it takes to get a deal done, the greater likelihood something will come up that blows it up. 2. Incorporating a Delaware C-corporation is by far the simplest option for high-growth tech startups. As an attorney in Silicon Valley, I cringed every time I had to deal with some other type of entity because it just wasted a lot of time (and thus the client's money) figuring out stuff that is muscle memory for Delaware C-corporations. And it always is painful to see the horror stories, like the one mentioned in the lecture. It's experiences like that that lead startup lawyers to advocate just going with the beaten path. All the extra headache is just not worth the few hundred dollars you save in franchise taxes. Penny wise, pound foolish.

7Figures2Commas 12y ago
> Incorporating a Delaware C-corporation is by far the simplest option for high-growth tech startups. As an attorney in Silicon Valley, I cringed every time I had to deal with some other type of entity because it just wasted a lot of time (and thus the client's money) figuring out stuff that is muscle memory for Delaware C-corporations. No offense, but this says more about your experience than it does about California corporate law. When you have a hammer, everything is a nail. Just because you worked at a full-service law firm that primarily deals with companies incorporated in Delaware doesn't mean that your experience represents all attorneys. Maintaining a California corporation is not rocket science. There are plenty of competent, experienced attorneys in California who have "muscle memory" when it comes to California law.
- swampthing 12y ago
  Let me put it to you this way - if you are building a high-growth tech company, you want lawyers who specialize in high-growth tech companies. Since most high-growth tech companies, at least in the US, are Delaware C-corporations, the lawyers that specialize in those companies are going to be most familiar with Delaware C-corporations. Do these lawyers have to be at large law firms? Nope, as you mentioned, there are plenty that are out on their own or are at smaller firms.
  - 7Figures2Commas 12y ago
    As I suggested above, the problem is that just about everybody in Silicon Valley is convinced they're starting a "high-growth" tech company, even when they have little more than an idea on a napkin. The number of companies that actually achieve high growth and have high-growth company legal needs is small, as is the number of startups that raise institutional capital. Heck, lots of companies struggle and fail to raise any funding at all. Of those that raise seed funding from angels, the majority will not be able to secure a real Series A. Structuring your entity and selecting an attorney on the assumption that you're starting a high-growth enterprise before you are anywhere close to having one is like spending all of your time and money trying to architect a web application that can support a billion users before you even have your first 100. It's premature optimization plain and simple. On that point, I have never met an entrepreneur who failed because he or she didn't incorporate in Delaware or retain a "startup attorney" with a fancy office on Page Mill Road. I have met plenty of entrepreneurs who have failed in part because they took on certain expenses prematurely based on misguided assumptions and rosy projections.
    - swampthing 12y ago
      Everything you're saying would make a lot of sense... except that incorporating as a Delaware C-corporation basically takes the same amount of time and money, if not less. It's not that complicated. You don't have to get an attorney with a fancy office on Page Mill Road. But even if you did some big law firm, you would probably get a fee deferral that covers formation, so you're not out of pocket anything anyways.

7Figures2Commas 12y ago

> Incorporating a Delaware C-corporation is by far the simplest option for high-growth tech startups. As an attorney in Silicon Valley, I cringed every time I had to deal with some other type of entity because it just wasted a lot of time (and thus the client's money) figuring out stuff that is muscle memory for Delaware C-corporations. No offense, but this says more about your experience than it does about California corporate law. When you have a hammer, everything is a nail. Just because you worked at a full-service law firm that primarily deals with companies incorporated in Delaware doesn't mean that your experience represents all attorneys. Maintaining a California corporation is not rocket science. There are plenty of competent, experienced attorneys in California who have "muscle memory" when it comes to California law.

swampthing 12y ago
Let me put it to you this way - if you are building a high-growth tech company, you want lawyers who specialize in high-growth tech companies. Since most high-growth tech companies, at least in the US, are Delaware C-corporations, the lawyers that specialize in those companies are going to be most familiar with Delaware C-corporations. Do these lawyers have to be at large law firms? Nope, as you mentioned, there are plenty that are out on their own or are at smaller firms.
- 7Figures2Commas 12y ago
  As I suggested above, the problem is that just about everybody in Silicon Valley is convinced they're starting a "high-growth" tech company, even when they have little more than an idea on a napkin. The number of companies that actually achieve high growth and have high-growth company legal needs is small, as is the number of startups that raise institutional capital. Heck, lots of companies struggle and fail to raise any funding at all. Of those that raise seed funding from angels, the majority will not be able to secure a real Series A. Structuring your entity and selecting an attorney on the assumption that you're starting a high-growth enterprise before you are anywhere close to having one is like spending all of your time and money trying to architect a web application that can support a billion users before you even have your first 100. It's premature optimization plain and simple. On that point, I have never met an entrepreneur who failed because he or she didn't incorporate in Delaware or retain a "startup attorney" with a fancy office on Page Mill Road. I have met plenty of entrepreneurs who have failed in part because they took on certain expenses prematurely based on misguided assumptions and rosy projections.
  - swampthing 12y ago
    Everything you're saying would make a lot of sense... except that incorporating as a Delaware C-corporation basically takes the same amount of time and money, if not less. It's not that complicated. You don't have to get an attorney with a fancy office on Page Mill Road. But even if you did some big law firm, you would probably get a fee deferral that covers formation, so you're not out of pocket anything anyways.