Based in Sydney, Australia, Foundry is a blog by Rebecca Thao. Her posts explore modern architecture through photos and quotes by influential architects, engineers, and artists.

What Is the Best Way to Structure a Startup Company Prior to Seeking Angel or VC Funding?

This is a dilemma that most startups face: how do I get reliable legal advice at a time when my company can least afford it? Engaging a lawyer sounds like it carries an expensive price tag, but it doesn’t need to. It’s precisely because startups need sound legal advice from the very beginning - and require continuing legal assistance - that is why I started LawTrades: to help young companies access high quality, affordable legal services.

Generally, what type of entity is best for any particular new business all depends on your goals, what industry your company is in and an assortment of other variables. Since each company has its own unique blend of strengths and challenges, the best way to start is with a knowledgeable startup attorney who can help you figure out what structure will best serve your company’s needs and objectives.

The fact that you’re asking about formation prior to seeking angel or VC funding is a great start since you want to be structured in a way that’ll attract those funds. An LLC or S-Corp is not going to work for VCs and an increasing number of angel investors for legal reasons. Delaware may or may not be the right choice for incorporation. Again, it’s crucial to positioning and also saving time and money down the road to structure your company the right way so you’ll be able to meet your objectives and accommodate investors when the time arrives.

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What Are the Most Common Mistakes That First-Time Entrepreneurs Make While Incorporating Their Tech Startup