Advice on Incorporation and Fundraising in the US

If you are thinking about starting a startup or expanding your startup to the US, you should check out this site on questions around incorporation, stock options, fundraising and M&A’s and cover legal advice. This site is written by Yoichiro Taku, a corporate and securities partner in Palo Alto at Wilson Sonsini Goodrich & Rosati.

Here are three popular questions with basic summaries:

1. When do I need to incorporate a company?

• More than one founder, creating IP, hiring employees or third party contractors, issuing stock options, launching a service/product and general liability issues, visas, stock sale, funding

2. What type of entity should I form?

• C corps, LLCs, and S corps differ by taxation, ownership, fundraising, governance and structure, and employee compensation.
• Many technology companies go with C Corps which is preferred by investors and avoid LLCs as they need to offer grant options.

3. What State should I incorporate in?

• Delaware is most popular, especially if seeking VC funding but know you will pay taxes in Delaware and the state you are operating (and also New Zealand)
• If you have IP originating in the US or as part of that US entity, there can be legal issues with the offshore parent company, so reach out to legal or tax advisors.

There are templates for a Series A term Sheet, Certificate of Incorporation and other useful documents for raising capital and incorporation. NZTE also has local lawyers, advisors, checklist and other New Zealand companies to connect you with if you are thinking about the US Market.