![]() ![]() The fact that professional investors will want you to have a C-corporation does not mean that you need to form as a C-corporation initially. For example, take a look at John Frankel’s answer to a similar question. Individual angel investors who don’t have to worry about pension fund investors can be more flexible. Not all professional investors require a C-corporation. Finally, professional investors are looking primarily to a sale of the company or an IPO as their investment “exit.” Companies that go public are, almost without exception, C-corporations. Professional investors also generally want to see you giving stock options to employees which is much easier to do with a C-corporation (more about that below). The tax laws that govern non-profits (such as pension funds) that often invest in VC funds make it difficult for those funds to invest in LLCs. Generally speaking, professional investors either require or strongly prefer to invest in a Delaware C-corporation. The information below is general in nature and should not be understood as a substitute for personal legal advice. I’m giving a generic answer to a generic question to educate the users of this site. First, a quick but important clarification: I’m not your lawyer and this answer doesn’t establish a lawyer-client relationship. ![]()
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