[{"id":430968,"date":"2026-04-23T19:48:07","date_gmt":"2026-04-23T18:48:07","guid":{"rendered":"https:\/\/seedlegals.com\/?p=430968"},"modified":"2026-04-23T19:48:07","modified_gmt":"2026-04-23T20:48:07","slug":"the-quantum-shift-how-a-new-computing-era-is-about-to-begin","status":"publish","type":"post","link":"https:\/\/seedlegals.com\/us\/resources\/the-quantum-shift-how-a-new-computing-era-is-about-to-begin\/","title":{"rendered":"The quantum shift: how a new computing era is about to begin"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>Matt Martin, co-founder of Muush, makes waves with a fungus-fuelled beverage, loaded with nutrients and healthy for kids and adults.      <\/p>\n","protected":false},"author":194,"featured_media":430974,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[157,158],"tags":[],"event_tags":[],"class_list":["post-430968","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-videos","category-founder-interviews-us"],"acf":{"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">Quantum computing is everywhere right now but for most founders, it still feels abstract, complex and out of reach.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this interview, <a href=\"https:\/\/seedlegals.com\/resources\/author\/anthony\/\" target=\"_blank\" rel=\"noopener\">Anthony Rose<\/a> (Founder &amp; CEO at SeedLegals) speaks with <a href=\"https:\/\/www.linkedin.com\/in\/elwisia\/\" target=\"_blank\" rel=\"noopener\">Eloisa Angeles<\/a>, Principal at the <a href=\"https:\/\/www.edenbase.com\" target=\"_blank\" rel=\"noopener\">Eden-based Quantum Fund<\/a>, to unpack what\u2019s really happening in the space, and why it matters.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Eloisa breaks down quantum computing in simple terms, explaining why it\u2019s not just a faster version of today\u2019s technology, but a completely new way of solving problems that were previously impossible. From drug discovery to optimization and modelling complex systems, the potential impact is enormous.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">She also shares where the technology actually is today, what needs to happen before we reach \u201cquantum advantage\u201d, and why the next few years could be a turning point. For founders and investors alike, this is a practical look at one of the most important (and least understood) shifts in tech.<\/span><\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"riverside_(edited)_quantum computing podcast _ feb 05, 2026_anthony's_studio (1)\" src=\"https:\/\/player.vimeo.com\/video\/1182913853?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n"},{"acf_fc_layout":"text","text":"<h2><b>Key takeaways<\/b><\/h2>\n<h3><strong>The problem with quantum today<\/strong><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Quantum computing is widely discussed, but still feels complex, inaccessible and hard to apply for most founders.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Current systems are limited by low numbers of usable qubits, restricting real-world applications.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Many investors and founders struggle to engage with the space due to long timelines and unclear commercial use cases.\u00a0<\/span><\/li>\n<\/ul>\n<h3><strong>The solution: a new way of computing<\/strong><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Quantum computing offers a completely different approach to computation, not just faster processing.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It enables solutions to previously impossible problems in areas like drug discovery, optimization and simulation<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The ecosystem is expanding beyond hardware into software, infrastructure and cloud access, making it increasingly usable.\u00a0<\/span><\/li>\n<\/ul>\n<h3><strong>Traction and what\u2019s next<\/strong><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Quantum computers already exist, with major players like IBM building early systems.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The key milestone is reaching ~100 logical qubits, expected between 2026 and 2029, unlocking \u201cquantum advantage\u201d.<\/span><\/li>\n<\/ul>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":"default","gtm_form_location":"default"}},"add_shadow":true}],"blog_layout":"v2","v2":{"hero":{"image_background_color":"#E7F1FF","image_fit":"img--cover"},"adverts":[{"type":"selector","selected_advert":{"ID":412056,"post_author":"77","post_date":"2024-11-11 09:42:57","post_date_gmt":"2024-11-11 09:42:57","post_content":"","post_title":"US - Newsletter","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"us-talk-to-the-team","to_ping":"","pinged":"","post_modified":"2024-11-13 16:07:38","post_modified_gmt":"2024-11-13 16:07:38","post_content_filtered":"","post_parent":0,"guid":"https:\/\/seedlegals.com\/?post_type=blog_advert&#038;p=412056","menu_order":0,"post_type":"blog_advert","post_mime_type":"","comment_count":"0","filter":"raw"},"custom_advert":{"advert_tracking_id":"","layout":"default","image":{"image":false,"link":""},"text":{"heading":"","content":"","button":null,"background_color":"#EEF4FF","text_color":"#000646"},"form":{"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. 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View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":false,"gtm_form_location":false}},"cta_and_testimonials":{"heading":"","button":null,"bullet_points":false,"testimonials":false}}}],"related_sidebar_posts":false},"show_author_card":false,"revision_date":"","hero_image":430974,"video_category_post_fields":{"video_listing_page_featured_image":430985},"has_custom_post_authors":true,"custom_post_authors":{"authors":[{"author":{"ID":3,"user_firstname":"Anthony","user_lastname":"Rose","nickname":"Anthony","user_nicename":"anthony","display_name":"Anthony Rose","user_email":"anthony@seedlegals.com","user_url":"","user_registered":"2019-10-18 15:42:52","user_description":"","user_avatar":"<img alt='' src='https:\/\/secure.gravatar.com\/avatar\/eec24f24334b9a815c127811f69deccd9cf669083b239a62f3a4c38997362003?s=96&#038;d=mm&#038;r=g' srcset='https:\/\/secure.gravatar.com\/avatar\/eec24f24334b9a815c127811f69deccd9cf669083b239a62f3a4c38997362003?s=192&#038;d=mm&#038;r=g 2x' class='avatar avatar-96 photo' height='96' width='96' loading='lazy' decoding='async'\/>"},"role":"Co-Founder & CEO"},{"author":{"ID":202,"user_firstname":"Kaylee","user_lastname":"Adinolfi","nickname":"Kaylee Adinolfi","user_nicename":"kaylee-adinolfi","display_name":"Kaylee Adinolfi","user_email":"here@seedlegalsfakeemail.com","user_url":"","user_registered":"2025-12-12 11:41:44","user_description":"","user_avatar":"<img alt='' src='https:\/\/secure.gravatar.com\/avatar\/912155f54cef6cda3469e8b99d9af1ae5e65996ca3b2eb6dfdae9c2b7cfa4351?s=96&#038;d=mm&#038;r=g' srcset='https:\/\/secure.gravatar.com\/avatar\/912155f54cef6cda3469e8b99d9af1ae5e65996ca3b2eb6dfdae9c2b7cfa4351?s=192&#038;d=mm&#038;r=g 2x' class='avatar avatar-96 photo' height='96' width='96' loading='lazy' decoding='async'\/>"},"role":""}]},"is_expert_reviewed":true,"expert_reviewed":{"heading":"Expert reviewed","tooltip_message":"This article has been fact-checked by a SeedLegals subject matter expert.<br><br><a href=\"https:\/\/seedlegals.com\/authors-and-experts\/\" target=\"_blank\">Meet our experts<\/a> and learn more about our review process and quality assurance in our <a href=\"https:\/\/seedlegals.com\/editorial-policy\/\" target=\"_blank\">editorial policy<\/a>."},"has_sources":false,"related_posts":false},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The quantum shift: how a new computing era is about to begin | SeedLegals<\/title>\n<meta name=\"description\" content=\"Muush makes a difference, with a new mix for the drinks industry based on lion\u2019s mane mushrooms. 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Travel Spoken is reshaping travel planning with AI"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>Eni Maj, co-founder of Travel Spoken, shares how the platform is turning travel content into bookable trips using AI \u2013 and why in-person networking is key to fundraising success.<\/p>\n","protected":false},"author":194,"featured_media":430578,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141,157,158],"tags":[],"event_tags":[],"class_list":["post-430570","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us","category-videos","category-founder-interviews-us"],"acf":{"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">How do you turn travel inspiration into instant bookings without the endless planning?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this founder interview, <a href=\"https:\/\/seedlegals.com\/resources\/author\/anthony\/\" target=\"_blank\" rel=\"noopener\">Anthony Rose<\/a> (Founder &amp; CEO at SeedLegals) speaks with <a href=\"https:\/\/www.linkedin.com\/in\/enim\/\" target=\"_blank\" rel=\"noopener\">Eni Maj,<\/a> co-founder of <a href=\"https:\/\/www.travelspoken.com\" target=\"_blank\" rel=\"noopener\">Travel Spoken<\/a>, an AI-powered platform transforming travel content into bookable trips.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Eni explains how Travel Spoken is rethinking the way people discover and book travel, using conversational and agentic AI to turn content into personalized itineraries. She also shares the thinking behind building a creator-driven marketplace, where travel content doesn\u2019t just inspire. It generates ongoing value.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">From building a startup in New York to raising investment through in-person networking, this conversation offers practical insights for founders looking to scale, fundraise and build in competitive markets.<\/span><\/p>\n<p>&nbsp;<\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"riverside_(edited)_eni &amp; anthony _ feb 26, 2026 001_anthony's_studio\" src=\"https:\/\/player.vimeo.com\/video\/1177637505?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n"},{"acf_fc_layout":"text","text":"<h2><b>Key takeaways<\/b><\/h2>\n<h3><strong>The problem with travel planning today<\/strong><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Travel inspiration lives on social media, but turning it into a bookable trip is slow and fragmented.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Content creators generate valuable travel content but don\u2019t benefit long-term from it financially.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Booking travel often involves multiple platforms, manual research and time-consuming decisions.<\/span><\/li>\n<\/ul>\n<h3><strong>Travel Spoken\u2019s solution<\/strong><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Travel Spoken uses conversational and agentic AI to turn travel content into instant, bookable experiences.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The platform creates a community of travellers and creators, where content lives longer and drives ongoing value.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Creators can earn revenue share from bookings, turning content into a long-term asset instead of a one-off post.<\/span><\/li>\n<\/ul>\n<h3><strong>Traction and next steps<\/strong><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Travel Spoken is currently raising $1.5M to scale the platform and marketplace.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Growth so far has been driven by in-person networking and investor relationships, particularly in New York.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The focus is on building a trusted travel ecosystem, where users book based on real experiences rather than ads.<\/span><\/li>\n<\/ul>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":"default","gtm_form_location":"default"}},"add_shadow":true}],"blog_layout":"v2","v2":{"hero":{"image_background_color":"#E7F1FF","image_fit":"img--cover"},"adverts":[{"type":"selector","selected_advert":{"ID":412056,"post_author":"77","post_date":"2024-11-11 09:42:57","post_date_gmt":"2024-11-11 09:42:57","post_content":"","post_title":"US - Newsletter","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"us-talk-to-the-team","to_ping":"","pinged":"","post_modified":"2024-11-13 16:07:38","post_modified_gmt":"2024-11-13 16:07:38","post_content_filtered":"","post_parent":0,"guid":"https:\/\/seedlegals.com\/?post_type=blog_advert&#038;p=412056","menu_order":0,"post_type":"blog_advert","post_mime_type":"","comment_count":"0","filter":"raw"},"custom_advert":{"advert_tracking_id":"","layout":"default","image":{"image":false,"link":""},"text":{"heading":"","content":"","button":null,"background_color":"#EEF4FF","text_color":"#000646"},"form":{"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. 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to Incorporate a Startup: Step-by-Step Guide to Form a Delaware C-Corp"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>Learn how to incorporate your startup in the USA with our step-by-step expert guide. Avoid common mistakes and get ready to raise funding faster.<\/p>\n","protected":false},"author":82,"featured_media":430795,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141,147],"tags":[],"event_tags":[],"class_list":["post-430721","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us","category-startup-guides-us"],"acf":{"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">Starting a company in the US? First things first: you need to incorporate your business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But if you\u2019ve been searching for \u201chow to incorporate a company\u201d, you\u2019ve probably already discovered something confusing: there isn\u2019t just one type of company.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Should you form an LLC or a corporation? What exactly is an S corp? Why do so many startups incorporate in Delaware, even if they operate somewhere else? And what steps do you actually need to take to incorporate properly?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this guide, we\u2019ll walk you through:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What incorporation means for startups<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The different company structures founders can choose<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Why most startups incorporate as a Delaware C-Corp<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What to do if you incorporated the wrong type of company<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Legal and admin essentials you need to know\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The step-by-step process to incorporate your company<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">By the end, you\u2019ll understand exactly how to incorporate your startup the right way, and how to avoid common mistakes that can slow you down later when raising investment.<\/span><\/p>\n"},{"acf_fc_layout":"cta","cta":{"type":"default","subheading":"","heading":"Incorporate quickly and easily","content":"We'll handle everything from start to finish. Get a clean, simple setup with the right structure to start taking investment immediately.","bullet_points":false,"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":"default","gtm_form_location":"default"},"button":{"title":"Let's go","url":"https:\/\/seedlegals.com\/us\/start\/incorporation\/","target":"_blank"},"image":427896}},{"acf_fc_layout":"text","text":"<h2><span style=\"font-weight: 400;\">What does it mean to incorporate a company?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Incorporation is the process of creating a company as a separate legal entity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once incorporated, your company becomes legally distinct from you as the founder. That means the business can:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">own assets<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">sign contracts<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">issue shares<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">raise investment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">hire employees<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Most importantly, incorporation provides limited liability.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This means your personal assets (like your house or savings) are generally protected if the business runs into financial or legal trouble.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For most startups, incorporating early is essential because it allows you to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">bring on co-founders<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">grant equity to employees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">raise money from investors<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Without a proper corporate structure, it\u2019s difficult to do any of these things cleanly.<\/span><\/p>\n"},{"acf_fc_layout":"text","text":"<h2><span style=\"font-weight: 400;\">What actually happens when you incorporate?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When you incorporate your company, you\u2019re not just filling out a form\u2014you\u2019re creating a legal structure with defined ownership and governance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At a high level, incorporation does three key things:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Creates the company as a legal entity<\/b><span style=\"font-weight: 400;\"> (separate from you personally)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Defines the share structure<\/b><span style=\"font-weight: 400;\"> (who can own what)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Sets up how decisions are made<\/b><span style=\"font-weight: 400;\"> (through directors and officers)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">From that point on, decisions aren\u2019t made informally. They\u2019re made through board approvals and documented actions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is what investors expect to see when they review your company.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What type of company should a startup form?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When incorporating a company in the US, founders typically choose between two main structures:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">LLC (Limited Liability Company)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">C-Corporation (C-Corp)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Both structures offer limited liability, but they work very differently\u2014especially when it comes to fundraising and equity.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">LLC<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">An LLC is a flexible business structure often used by:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">freelancers<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">consultants<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">agencies<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">small businesses<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">LLCs are relatively simple to set up and often have favorable tax treatment because profits pass directly to the owners.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, LLCs usually aren\u2019t the best structure for venture-backed startups.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s because:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">issuing equity is complicated<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">employee stock options are difficult to structure<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">venture capital funds typically can\u2019t invest in LLCs<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"If you\u2019re building a business that you plan to grow and potentially raise funding for, an LLC can quickly become limiting. And to receive investment money, you\u2019ll need to <a href=\"https:\/\/seedlegals.com\/us\/raise\/llc-to-delaware-c-corp-conversion\/\" target=\"_blank\" rel=\"noopener noreferrer\"><br \/>\r\n  change from an LLC to a C corp<\/a>, which costs time and money. ","link":null},{"acf_fc_layout":"text","text":"<h3><span style=\"font-weight: 400;\">C-Corporation<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A C-Corporation is the standard structure used by venture-backed startups. Companies like Stripe, Airbnb, and Coinbase all started as Delaware C-Corps.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">C-Corps make it easy to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">issue shares to founders<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">grant stock options to employees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">raise money from angel investors and VCs<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">create clear cap tables<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">scale internationally<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">They also allow investors to benefit from tax incentives designed to encourage startup investment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For these reasons, most high-growth startups incorporate as a Delaware C-Corp from the start. Investors expect it, lawyers are familiar with it, and it creates the cleanest structure for scaling your company.<\/span><\/p>\n"},{"acf_fc_layout":"expert_highlight","expert_highlight":{"":null,"image":{"ID":17564,"id":17564,"title":"Anthony Rose, Ceo & Co Founder","filename":"Anthony-Rose-CEO-Co-Founder.png","filesize":262140,"url":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","link":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","alt":"","author":"22","description":"Anthony Rose, Ceo & Co Founder","caption":"Anthony Rose, Ceo & Co Founder","name":"e938a7ce2ef74e92ba10b35a4442c48d","status":"inherit","uploaded_to":22998,"date":"2019-11-15 07:31:59","modified":"2023-11-14 11:53:43","menu_order":0,"mime_type":"image\/png","type":"image","subtype":"png","icon":"https:\/\/seedlegals.com\/wp-includes\/images\/media\/default.png","width":1536,"height":1536,"sizes":{"thumbnail":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","thumbnail-width":150,"thumbnail-height":150,"medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium-width":300,"medium-height":300,"medium_large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium_large-width":768,"medium_large-height":768,"large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","large-width":1024,"large-height":1024,"_themosis_media":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","_themosis_media-width":100,"_themosis_media-height":100,"1536x1536":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","1536x1536-width":1536,"1536x1536-height":1536,"2048x2048":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","2048x2048-width":1536,"2048x2048-height":1536,"themosis":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","themosis-width":150,"themosis-height":150,"tog-small":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-small-width":300,"tog-small-height":300,"tog-medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-medium-width":600,"tog-medium-height":600,"tog-large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-large-width":1000,"tog-large-height":1000,"tog-huge":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-huge-width":1400,"tog-huge-height":1400}},"quote":"<p>If you\u2019re planning to raise investment, your company structure isn\u2019t really optional. Investors expect a Delaware C-Corp because it gives them a clean, standard way to invest. Anything else just adds friction.<\/p>\n","name":{"title":"Anthony Rose","url":"https:\/\/seedlegals.com\/resources\/author\/anthony\/","target":"_blank"},"role":"Co-founder & CEO","company":{"title":"SeedLegals","url":"https:\/\/seedlegals.com\/us\/","target":"_blank"},"linkedin":"","facebook":"","instagram":"","twitter":"","hide_image":false}},{"acf_fc_layout":"text","text":"<h3><span style=\"font-weight: 400;\">S-Corporation<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">An S-Corporation isn\u2019t technically a different type of company\u2014it\u2019s a tax election that a company can apply for with the IRS.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If eligible, the company\u2019s profits and losses pass through to the shareholders\u2019 personal tax returns, rather than being taxed at the corporate level.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">S-Corps are commonly used by:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">small business owners<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">solo founders<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">service-based businesses<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">However, there are some important restrictions. To qualify as an S-Corp, a company must:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">have no more than 100 shareholders<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">have only US-based individual shareholders (with limited exceptions)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">issue only one class of stock<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Because of these limitations, S-Corps aren\u2019t suitable for most startups planning to raise investment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They don\u2019t allow preferred shares, and the ownership restrictions don\u2019t work for venture capital or institutional investors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For startups aiming to scale and raise funding, a Delaware C-Corp is still the better choice.<\/span><\/p>\n<p><b>Learn more: <\/b><a href=\"https:\/\/seedlegals.com\/us\/resources\/should-i-incorporate-my-startup-as-an-llc-an-s-corp-or-a-c-corp\/\"><span style=\"font-weight: 400;\">Should I incorporate as an LLC, C corp or S corp?<\/span><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">Why startups incorporate in Delaware<\/span><\/h2>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"Even if you\u2019re based in California, New York, or Texas, many startups still choose to incorporate in Delaware. In fact, more than 60% of Fortune 500 companies are incorporated there.<br \/>\r\n","link":null},{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">Delaware has become the standard for startups for several reasons.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Predictable business law<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Delaware has a specialised business court called the Court of Chancery. It handles corporate disputes and has built up decades of case law, making outcomes more predictable.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Investor familiarity<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Most venture capital firms prefer investing in Delaware C-Corps because the legal structure is well understood. Choosing Delaware removes friction during fundraising.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Flexible corporate governance<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Delaware corporate law makes it easier to structure boards, share classes, and investor rights in ways that work for startups.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Fast incorporation<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Delaware is known for its fast and efficient filing system, which makes incorporation quick and straightforward.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For these reasons, Delaware has become the default home for startup corporations.<\/span><\/p>\n"},{"acf_fc_layout":"text","text":"<h2><span style=\"font-weight: 400;\">How to incorporate a Delaware C-Corp: step by step<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Here are the main steps you need to follow to incorporate your startup in the USA.\u00a0<\/span><\/p>\n"},{"acf_fc_layout":"text","text":"<h3><span style=\"font-weight: 400;\">1. Choose a company name<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The first step is choosing a unique company name.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Your company name must:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">be available in Delaware<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">include a corporate suffix such as Inc., Corp., or Corporation<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">It\u2019s also worth checking:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">domain availability<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">trademark conflicts<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">social media handles<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Choosing the right name early helps avoid rebranding later.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">2. File the Certificate of Incorporation<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The Certificate of Incorporation is the document that officially creates your company.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s filed with the Delaware Division of Corporations and typically includes:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">company name<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">registered agent<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">share structure<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">incorporator details<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Once the state approves the filing, your company legally exists.<\/span><\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"The \u201cincorporator\u201d is the person who files the company formation documents. This is often a service provider, not necessarily one of the founders.<br \/>\r\n","link":null},{"acf_fc_layout":"text","text":"<h3><span style=\"font-weight: 400;\">3. Appoint a registered agent<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Every Delaware corporation must appoint a registered agent with a physical address in the state.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The registered agent receives official correspondence on behalf of your company, including:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">legal notices<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">tax documents<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">government filings<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Most startups use a professional registered agent service.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">4. Create company bylaws<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Your company\u2019s bylaws define how the corporation will be governed.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They typically set out:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">how board meetings work<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">voting procedures<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">officer responsibilities<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">shareholder rights<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Bylaws aren\u2019t filed publicly, but they\u2019re an essential part of your corporate records.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">5. Issue founder shares<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Once the company exists, it needs to issue shares to the founders. This is where your startup\u2019s ownership structure is created.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Founders usually:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">set the total share pool (often 10 million shares)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">allocate shares between founders<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">create vesting schedules<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">sign stock purchase agreements<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Getting this right early is important because investors will look closely at your cap table when you raise funding.<\/span><\/p>\n<h4><span style=\"font-weight: 400;\">Authorized vs issued shares (what founders often miss)<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">When you incorporate, you\u2019ll define the total number of shares your company is allowed to create (authorized shares). But you don\u2019t issue all of them straight away.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Instead:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Authorized shares = the total pool (for example, 10 million)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Issued shares = the portion given to founders (and later, investors or employees)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Keeping a large number of shares unissued gives you flexibility to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">bring in investors<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">create an employee option pool<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">scale without restructuring your cap table<\/span><\/li>\n<\/ul>\n"},{"acf_fc_layout":"expert_highlight","expert_highlight":{"":null,"image":{"ID":17564,"id":17564,"title":"Anthony Rose, Ceo & Co Founder","filename":"Anthony-Rose-CEO-Co-Founder.png","filesize":262140,"url":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","link":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","alt":"","author":"22","description":"Anthony Rose, Ceo & Co Founder","caption":"Anthony Rose, Ceo & Co Founder","name":"e938a7ce2ef74e92ba10b35a4442c48d","status":"inherit","uploaded_to":22998,"date":"2019-11-15 07:31:59","modified":"2023-11-14 11:53:43","menu_order":0,"mime_type":"image\/png","type":"image","subtype":"png","icon":"https:\/\/seedlegals.com\/wp-includes\/images\/media\/default.png","width":1536,"height":1536,"sizes":{"thumbnail":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","thumbnail-width":150,"thumbnail-height":150,"medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium-width":300,"medium-height":300,"medium_large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium_large-width":768,"medium_large-height":768,"large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","large-width":1024,"large-height":1024,"_themosis_media":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","_themosis_media-width":100,"_themosis_media-height":100,"1536x1536":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","1536x1536-width":1536,"1536x1536-height":1536,"2048x2048":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","2048x2048-width":1536,"2048x2048-height":1536,"themosis":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","themosis-width":150,"themosis-height":150,"tog-small":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-small-width":300,"tog-small-height":300,"tog-medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-medium-width":600,"tog-medium-height":600,"tog-large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-large-width":1000,"tog-large-height":1000,"tog-huge":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-huge-width":1400,"tog-huge-height":1400}},"quote":"<p>One of the most common misconceptions is that all shares are issued at incorporation. In reality, you\u2019re creating a pool for future growth. That flexibility is what allows startups to raise funding and hire teams without restructuring.<\/p>\n","name":{"title":"Anthony Rose","url":"https:\/\/seedlegals.com\/resources\/author\/anthony\/","target":"_blank"},"role":"Co-founder & CEO","company":{"title":"SeedLegals","url":"https:\/\/seedlegals.com\/us\/","target":"_blank"},"linkedin":{"title":"Anthony Rose","url":"https:\/\/www.linkedin.com\/in\/anrose\/","target":"_blank"},"facebook":"","instagram":"","twitter":"","hide_image":false}},{"acf_fc_layout":"text","text":"<h4><span style=\"font-weight: 400;\">What\u2019s a stock purchase agreement?<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">A stock purchase agreement is a legal document that sets out the terms on which founders (or investors) buy shares in a company. It covers details like how many shares are issued, the price, and any conditions such as vesting.<\/span><\/p>\n<h4><span style=\"font-weight: 400;\">What\u2019s a vesting schedule?<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">A vesting schedule sets out how a founder or team member earns their shares over time, rather than owning them all upfront. It\u2019s designed to ensure equity is earned through continued contribution to the company.<\/span><\/p>\n<p><a href=\"https:\/\/seedlegals.com\/resources\/startup-founder-vesting\/\"><span style=\"font-weight: 400;\">Founder vesting <\/span><\/a><span style=\"font-weight: 400;\">protects the company if a founder leaves early. Without vesting, a departing founder could walk away with a large percentage of the company without continuing to contribute.<\/span><\/p>\n"},{"acf_fc_layout":"expert_highlight","expert_highlight":{"":null,"image":{"ID":17564,"id":17564,"title":"Anthony Rose, Ceo & Co Founder","filename":"Anthony-Rose-CEO-Co-Founder.png","filesize":262140,"url":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","link":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","alt":"","author":"22","description":"Anthony Rose, Ceo & Co Founder","caption":"Anthony Rose, Ceo & Co Founder","name":"e938a7ce2ef74e92ba10b35a4442c48d","status":"inherit","uploaded_to":22998,"date":"2019-11-15 07:31:59","modified":"2023-11-14 11:53:43","menu_order":0,"mime_type":"image\/png","type":"image","subtype":"png","icon":"https:\/\/seedlegals.com\/wp-includes\/images\/media\/default.png","width":1536,"height":1536,"sizes":{"thumbnail":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","thumbnail-width":150,"thumbnail-height":150,"medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium-width":300,"medium-height":300,"medium_large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium_large-width":768,"medium_large-height":768,"large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","large-width":1024,"large-height":1024,"_themosis_media":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","_themosis_media-width":100,"_themosis_media-height":100,"1536x1536":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","1536x1536-width":1536,"1536x1536-height":1536,"2048x2048":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","2048x2048-width":1536,"2048x2048-height":1536,"themosis":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","themosis-width":150,"themosis-height":150,"tog-small":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-small-width":300,"tog-small-height":300,"tog-medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-medium-width":600,"tog-medium-height":600,"tog-large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-large-width":1000,"tog-large-height":1000,"tog-huge":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-huge-width":1400,"tog-huge-height":1400}},"quote":"<p>Vesting isn\u2019t about mistrust between founders, it\u2019s about protecting the company if plans change. It keeps things fair for everyone building the business long-term.<\/p>\n","name":{"title":"Anthony Rose","url":"https:\/\/seedlegals.com\/resources\/author\/anthony\/","target":"_blank"},"role":"Co-founder & CEO","company":{"title":"SeedLegals","url":"https:\/\/seedlegals.com\/us\/","target":"_blank"},"linkedin":{"title":"Anthony Rose","url":"https:\/\/www.linkedin.com\/in\/anrose\/","target":"_blank"},"facebook":"","instagram":"","twitter":"","hide_image":false}},{"acf_fc_layout":"text","text":"<h3><span style=\"font-weight: 400;\">6. Appoint the board and company officers<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A corporation must have a Board of Directors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Early-stage startups usually start with:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">one or two founders as directors<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">founders serving as officers (for example CEO or CFO)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The board is responsible for approving key company decisions, including issuing shares and adopting bylaws.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">7. Set up your startup for operations<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Once incorporated, there are a few additional steps before you can fully operate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These typically include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">obtaining an EIN from the IRS<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">opening a business bank account<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">creating your <\/span><a href=\"https:\/\/seedlegals.com\/us\/resources\/cap-table-what-it-is-and-why-you-need-one\/\"><span style=\"font-weight: 400;\">cap table<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">setting up <\/span><a href=\"https:\/\/seedlegals.com\/us\/resources\/how-much-equity-should-us-startups-give-employees\/\"><span style=\"font-weight: 400;\">employee equity plans<\/span><\/a><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">After these steps, your company is ready to operate and raise funding. But there&#8217;s a way easier way to do all this. When you use SeedLegals to incorporate, we take care of everything, fast and seamlessly, so you can free up headspace to focus on other things.\u00a0<\/span><\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"Your EIN (Employer Identification Number) is essentially your company\u2019s tax ID. You\u2019ll need it to open a bank account, hire employees, and file taxes.<br \/>\r\n","link":null},{"acf_fc_layout":"text","text":"<h2><span style=\"font-weight: 400;\">How to incorporate your Delaware C-Corp with SeedLegals<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As you can tell from reading the above steps, there can be a fair bit of admin involved, which you don\u2019t need more of when you\u2019re building your business. Incorporating your company can involve weeks of legal work and expensive law firm fees.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But don\u2019t worry, there\u2019s good news! We\u2019ve simplified the entire process, guiding you through it so you can set up your startup correctly from day one.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s how it works:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Tell us about your company<\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\"> Enter your company name, founder details, and key information. We use this to generate your Delaware incorporation documents accurately.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>We prepare and file your Certificate of Incorporation<\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\"> Your formation documents are created automatically. Once you confirm everything looks right, we file them for you and set up your registered agent (with the first year included).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Get your EIN<\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\"> We help you obtain your EIN from the IRS so you can open a business bank account, run payroll, and start operating.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Complete your post-incorporation setup<\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\"> Generate all the key documents your startup needs\u2014including issuing founder shares, setting vesting, filing 83(b) elections, assigning IP, and putting the right protections in place.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Everything is created, signed, and stored securely in one place, and our team is there to help if you need guidance along the way, all for just $350. <\/span><\/p>\n"},{"acf_fc_layout":"cta","cta":{"type":"default","subheading":"","heading":"Incorporate Your Delaware C Corp in Minutes","content":"Get set up the right way, right from the start. Avoid common mistakes and streamline the process.","bullet_points":false,"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":"default","gtm_form_location":"default"},"button":{"title":"Learn more","url":"https:\/\/seedlegals.com\/us\/start\/incorporation\/","target":"_blank"},"image":427896}},{"acf_fc_layout":"text","text":"<h2><span style=\"font-weight: 400;\">What if you already started your company as an LLC?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Many founders begin with an LLC because it\u2019s simple and inexpensive. But once fundraising becomes part of the plan, investors usually expect the company to be a Delaware C-Corp. That\u2019s because C-Corps make it easier to issue stock and structure investment rounds.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you already have an LLC, you generally have two options:<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Convert the LLC into a C-Corp<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In many cases, you can convert your existing LLC into a Delaware C-Corp.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This allows:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the same company to continue operating<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">intellectual property and contracts to stay in one entity<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">LLC ownership interests to convert into stock<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This is usually the cleanest option if your company has already built a product, signed customers, or created intellectual property.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Form a new C-Corp<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If your LLC hasn\u2019t done much yet, you might instead create a new Delaware C-Corp and start fresh.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, if your LLC already owns valuable assets or IP, converting the entity is usually safer to avoid ownership complications later.<\/span><\/p>\n<p><b>Dive deeper<\/b><b><br \/>\n<\/b><a href=\"https:\/\/seedlegals.com\/us\/resources\/convert-llc-or-create-new-c-corp\/\"><span style=\"font-weight: 400;\">Should you convert your LLC or create a new C Corp?<\/span><b><br \/>\n<\/b><\/a><a href=\"https:\/\/seedlegals.com\/us\/resources\/how-to-convert-your-llc-into-a-c-corp\/\"><span style=\"font-weight: 400;\">How to convert your LLC to a C corp<\/span><\/a><\/p>\n"},{"acf_fc_layout":"cta","cta":{"type":"default","subheading":"","heading":"Quickly Convert your LLC into a Delaware C Corp","content":"SeedLegals is the only platform that takes you from conversion into fundraising, with best-in-class documents built with lawyers. ","bullet_points":false,"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":"default","gtm_form_location":"default"},"button":{"title":"Find out more","url":"https:\/\/seedlegals.com\/us\/raise\/llc-to-delaware-c-corp-conversion\/","target":"_blank"},"image":425033}},{"acf_fc_layout":"text","text":"<h2><span style=\"font-weight: 400;\">Common incorporation mistakes founders make<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Incorporation sounds simple, but it\u2019s easy to get key details wrong early on. These small mistakes can create bigger issues when you start raising funding or bringing in new team members. They can slow you down and be costly, so make sure you avoid them.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some of the most common pitfalls include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Choosing the wrong company structure<\/b><span style=\"font-weight: 400;\"> (for example, setting up an LLC when you plan to raise venture capital)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Issuing founder shares incorrectly<\/b><span style=\"font-weight: 400;\">, or not documenting them properly<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Forgetting to include founder vesting<\/b><span style=\"font-weight: 400;\">, which can cause problems if a founder leaves early<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Messy or incomplete cap tables<\/b><span style=\"font-weight: 400;\">, making it unclear who owns what<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Missing or inconsistent corporate documents<\/b><span style=\"font-weight: 400;\">, like bylaws or board approvals<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These issues can slow down fundraising, raise red flags with investors, or lead to costly legal fixes later.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Getting your setup right from the start gives you a clean foundation to grow\u2014and makes everything from hiring to fundraising much smoother.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Keeping your company \u201cinvestor-ready\u201d<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">After incorporation, it\u2019s important to maintain good corporate hygiene.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This means:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">keeping your cap table up to date<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">documenting key decisions (like issuing shares or appointing directors)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">storing signed documents in one place<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">making sure ownership and IP are clearly assigned to the company<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Investors will review all of this during due diligence.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A clean, well-organised company makes fundraising faster and smoother.<\/span><\/p>\n"},{"acf_fc_layout":"expert_highlight","expert_highlight":{"":null,"image":{"ID":17564,"id":17564,"title":"Anthony Rose, Ceo & Co Founder","filename":"Anthony-Rose-CEO-Co-Founder.png","filesize":262140,"url":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","link":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","alt":"","author":"22","description":"Anthony Rose, Ceo & Co Founder","caption":"Anthony Rose, Ceo & Co Founder","name":"e938a7ce2ef74e92ba10b35a4442c48d","status":"inherit","uploaded_to":22998,"date":"2019-11-15 07:31:59","modified":"2023-11-14 11:53:43","menu_order":0,"mime_type":"image\/png","type":"image","subtype":"png","icon":"https:\/\/seedlegals.com\/wp-includes\/images\/media\/default.png","width":1536,"height":1536,"sizes":{"thumbnail":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","thumbnail-width":150,"thumbnail-height":150,"medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium-width":300,"medium-height":300,"medium_large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","medium_large-width":768,"medium_large-height":768,"large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","large-width":1024,"large-height":1024,"_themosis_media":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","_themosis_media-width":100,"_themosis_media-height":100,"1536x1536":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","1536x1536-width":1536,"1536x1536-height":1536,"2048x2048":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","2048x2048-width":1536,"2048x2048-height":1536,"themosis":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","themosis-width":150,"themosis-height":150,"tog-small":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-small-width":300,"tog-small-height":300,"tog-medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-medium-width":600,"tog-medium-height":600,"tog-large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-large-width":1000,"tog-large-height":1000,"tog-huge":"https:\/\/seedlegals.com\/wp-content\/uploads\/2019\/11\/Anthony-Rose-CEO-Co-Founder.png","tog-huge-width":1400,"tog-huge-height":1400}},"quote":"<p>When investors run due diligence, they\u2019re not just looking at your product\u2014they\u2019re looking at how your company is set up. Clean documents and a clear cap table can make the difference between a smooth raise and weeks of delays.<\/p>\n","name":{"title":"Anthony Rose","url":"https:\/\/seedlegals.com\/resources\/author\/anthony\/","target":"_blank"},"role":"Co-founder & CEO","company":{"title":"SeedLegals","url":"https:\/\/seedlegals.com\/us\/","target":"_blank"},"linkedin":{"title":"Anthony Rose","url":"https:\/\/www.linkedin.com\/in\/anrose\/","target":"_blank"},"facebook":"","instagram":"","twitter":"","hide_image":false}},{"acf_fc_layout":"text","text":"<h2><span style=\"font-weight: 400;\">Key takeaway<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Incorporating your startup is one of the most important early decisions you\u2019ll make.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For most founders planning to scale or raise investment, the best structure is usually a Delaware C-Corp.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s the structure investors expect, it supports issuing equity, and it creates a clean foundation for growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The good news is that incorporation doesn\u2019t need to be complicated. In fact, we\u2019ll help you get it done in under an hour with the click of a button. <\/span><a href=\"https:\/\/auth.seedlegals.com\/oauth2\/register?response_type=code&amp;client_id=50916e3c-f1ae-405a-b9f6-8529061049c8&amp;scope=openid%20email%20offline_access&amp;state=5q1OGrjMNA4vt66ceacxKl2SnPrMNPflIASsFjKCVpc%3D&amp;redirect_uri=https:\/\/api.seedlegals.com\/login\/oauth2\/code\/fAuth&amp;nonce=Xk8NoqbaNesgFYLN5epfuNCnkUIzvouJBj1LUE0sAiw\"><span style=\"font-weight: 400;\">Get started here<\/span><\/a><span style=\"font-weight: 400;\">, or book a free call with our team below if you want to chat about it first.\u00a0<\/span><\/p>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":"default","gtm_form_location":"default"}},"add_shadow":false}],"hero_image":430795,"blog_layout":"v2","v2":{"hero":{"image_background_color":"#E7F1FF","image_fit":"img--contain"},"adverts":[{"type":"selector","selected_advert":{"ID":412056,"post_author":"77","post_date":"2024-11-11 09:42:57","post_date_gmt":"2024-11-11 09:42:57","post_content":"","post_title":"US - Newsletter","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"us-talk-to-the-team","to_ping":"","pinged":"","post_modified":"2024-11-13 16:07:38","post_modified_gmt":"2024-11-13 16:07:38","post_content_filtered":"","post_parent":0,"guid":"https:\/\/seedlegals.com\/?post_type=blog_advert&#038;p=412056","menu_order":0,"post_type":"blog_advert","post_mime_type":"","comment_count":"0","filter":"raw"},"custom_advert":{"advert_tracking_id":"","layout":"default","image":{"image":false,"link":""},"text":{"heading":"","content":"","button":null,"background_color":"#EEF4FF","text_color":"#000646"},"form":{"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. 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View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":false,"gtm_form_location":false}},"cta_and_testimonials":{"heading":"","button":null,"bullet_points":false,"testimonials":false}}}],"related_sidebar_posts":false},"show_author_card":false,"revision_date":"","has_custom_post_authors":true,"is_expert_reviewed":false,"has_sources":false,"related_posts":false,"custom_post_authors":{"authors":[{"author":{"ID":3,"user_firstname":"Anthony","user_lastname":"Rose","nickname":"Anthony","user_nicename":"anthony","display_name":"Anthony Rose","user_email":"anthony@seedlegals.com","user_url":"","user_registered":"2019-10-18 15:42:52","user_description":"","user_avatar":"<img alt='' src='https:\/\/secure.gravatar.com\/avatar\/eec24f24334b9a815c127811f69deccd9cf669083b239a62f3a4c38997362003?s=96&#038;d=mm&#038;r=g' srcset='https:\/\/secure.gravatar.com\/avatar\/eec24f24334b9a815c127811f69deccd9cf669083b239a62f3a4c38997362003?s=192&#038;d=mm&#038;r=g 2x' class='avatar avatar-96 photo' height='96' width='96' loading='lazy' decoding='async'\/>"},"role":"Expert Contributor"},{"author":{"ID":82,"user_firstname":"Kaylin","user_lastname":"Sullivan","nickname":"Kaylin Sullivan","user_nicename":"kaylin","display_name":"Kaylin Sullivan","user_email":"kaylin@seedlegals.com","user_url":"","user_registered":"2022-04-11 11:06:43","user_description":"","user_avatar":"<img alt='' src='https:\/\/secure.gravatar.com\/avatar\/0652066345ed869ee09c20fad9ad22d5dadc0ee3bb4ca278683547efbb5d93d4?s=96&#038;d=mm&#038;r=g' srcset='https:\/\/secure.gravatar.com\/avatar\/0652066345ed869ee09c20fad9ad22d5dadc0ee3bb4ca278683547efbb5d93d4?s=192&#038;d=mm&#038;r=g 2x' class='avatar avatar-96 photo' height='96' width='96' loading='lazy' decoding='async'\/>"},"role":"Writer"}]}},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to Incorporate a Startup: Step-by-Step Guide to Form a Delaware C-Corp | SeedLegals<\/title>\n<meta name=\"description\" content=\"Learn how to incorporate your startup in the USA the quick and easy way with our expert guide. 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Introducing the SAFER"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>SAFEs Are Not Safe \u2014 And Why SAFER Fixes Them<br \/>\nFor years, the Simple Agreement for Future Equity (SAFE) has been the default instrument for early-stage startup fundraising\u2014particularly in the US. Popularised by Y Combinator, SAFEs promised speed, simplicity, and lower legal costs.<br \/>\nBut there\u2019s a<\/p>\n","protected":false},"author":3,"featured_media":430413,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141],"tags":[],"event_tags":[],"class_list":["post-430412","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us"],"acf":{"related_posts":false,"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<h1 data-section-id=\"k34mft\" data-start=\"138\" data-end=\"185\">SAFEs Are Not Safe &#8211; And Why SAFER Fixes Them<\/h1>\n<p data-start=\"187\" data-end=\"421\">For years, the Simple Agreement for Future Equity (SAFE) has been the default instrument for early-stage startup fundraising, particularly in the US. Popularised by Y Combinator, SAFEs promised speed, simplicity, and lower legal costs.<\/p>\n<p data-start=\"423\" data-end=\"493\">But there\u2019s a growing realisation across founders and investors alike:<\/p>\n<p data-start=\"495\" data-end=\"529\"><strong data-start=\"495\" data-end=\"529\">SAFEs are not actually \u201csafe.\u201d<\/strong><\/p>\n<p data-start=\"531\" data-end=\"725\">At SeedLegals, we believe it\u2019s time to rethink SAFEs, and that\u2019s why we\u2019ve developed the <strong data-start=\"619\" data-end=\"628\">SAFER<\/strong>: a modern alternative that preserves the benefits of SAFEs while fixing their fundamental flaws.<\/p>\n<p><span style=\"font-weight: 400;\">SAFES are not safe. Introducing the SAFER.<\/span><\/p>\n<p>Watch the video for a full explanation, including a walkthrough of the SAFER instrument.<\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"SAFE so not safe. Introducing the SAFER\" src=\"https:\/\/player.vimeo.com\/video\/1175832195?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n<hr data-start=\"727\" data-end=\"730\" \/>\n<h2 data-section-id=\"z9lnia\" data-start=\"732\" data-end=\"774\">The Core Problem: SAFEs Delay Ownership<\/h2>\n<p data-start=\"776\" data-end=\"807\">At its heart, a SAFE is an IOU:<\/p>\n<blockquote data-start=\"809\" data-end=\"883\">\n<p data-start=\"811\" data-end=\"883\">You give a company money now, and they promise to give you shares later.<\/p>\n<\/blockquote>\n<p data-start=\"885\" data-end=\"1000\">That delay creates a surprising number of problems, many of which only become visible months or years down the line.<\/p>\n<hr data-start=\"1002\" data-end=\"1005\" \/>\n<h2 data-section-id=\"ocr9dh\" data-start=\"1007\" data-end=\"1046\">Why SAFEs Are Not Safe for Investors<\/h2>\n<h3 data-section-id=\"cv8bsn\" data-start=\"1048\" data-end=\"1075\">1. QSBS Tax Uncertainty<\/h3>\n<p data-start=\"1077\" data-end=\"1137\">One of the biggest hidden risks with SAFEs is tax treatment.<\/p>\n<p data-start=\"1139\" data-end=\"1313\">Investors in US startups often rely on <strong data-start=\"1178\" data-end=\"1219\">Qualified Small Business Stock (QSBS)<\/strong> tax relief, which can provide massive tax benefits after holding shares for a certain period.<\/p>\n<p data-start=\"1315\" data-end=\"1336\">But here\u2019s the issue:<\/p>\n<ul data-start=\"1338\" data-end=\"1472\">\n<li data-section-id=\"1904sy0\" data-start=\"1338\" data-end=\"1387\">With a SAFE, you don\u2019t actually own shares yet.<\/li>\n<li data-section-id=\"fw2o08\" data-start=\"1388\" data-end=\"1472\">The <strong data-start=\"1394\" data-end=\"1448\">QSBS holding period may not start until conversion<\/strong>, not when you invested.<\/li>\n<\/ul>\n<p data-start=\"1474\" data-end=\"1561\">That uncertainty could delay or even eliminate tax benefits worth millions or billions.<\/p>\n<blockquote data-start=\"1563\" data-end=\"1751\">\n<p data-start=\"1565\" data-end=\"1751\">\u201cThe jury\u2019s out as to whether the QSBS clock starts on the date the SAFE was issued or when it converts\u2026 that indecision could cost billions later.\u201d<\/p>\n<\/blockquote>\n<hr data-start=\"1753\" data-end=\"1756\" \/>\n<h3 data-section-id=\"coidgy\" data-start=\"1758\" data-end=\"1789\">2. No Upside in Early Exits<\/h3>\n<p data-start=\"1791\" data-end=\"1839\">If a company is acquired before a SAFE converts:<\/p>\n<ul data-start=\"1841\" data-end=\"1927\">\n<li data-section-id=\"3oazcl\" data-start=\"1841\" data-end=\"1883\">Investors may only get their money back.<\/li>\n<li data-section-id=\"mf9rq2\" data-start=\"1884\" data-end=\"1927\">They <strong data-start=\"1891\" data-end=\"1926\">don\u2019t participate in the upside<\/strong>.<\/li>\n<\/ul>\n<p data-start=\"1929\" data-end=\"2018\">That\u2019s a shocking outcome for what is supposed to be a high-risk, high-reward investment.<\/p>\n<hr data-start=\"2020\" data-end=\"2023\" \/>\n<h3 data-section-id=\"vwwbvf\" data-start=\"2025\" data-end=\"2069\">3. No Downside Protection (Section 1244)<\/h3>\n<p data-start=\"2071\" data-end=\"2092\">If the company fails:<\/p>\n<ul data-start=\"2094\" data-end=\"2234\">\n<li data-section-id=\"c2xw68\" data-start=\"2094\" data-end=\"2158\">SAFE holders may not qualify for <strong data-start=\"2129\" data-end=\"2157\">Section 1244 loss relief<\/strong>.<\/li>\n<li data-section-id=\"17gn88w\" data-start=\"2159\" data-end=\"2234\">That relief is typically available only to shareholders, not SAFE holders.<\/li>\n<\/ul>\n<p data-start=\"2236\" data-end=\"2310\">So investors can miss out on valuable tax write-offs in failure scenarios.<\/p>\n<hr data-start=\"2312\" data-end=\"2315\" \/>\n<h3 data-section-id=\"85zhx7\" data-start=\"2317\" data-end=\"2345\">4. No Shareholder Rights<\/h3>\n<p data-start=\"2347\" data-end=\"2378\">Until conversion, SAFE holders:<\/p>\n<ul data-start=\"2380\" data-end=\"2519\">\n<li data-section-id=\"sg45fx\" data-start=\"2380\" data-end=\"2402\">Are not shareholders<\/li>\n<li data-section-id=\"1pdza4i\" data-start=\"2403\" data-end=\"2440\">Typically have <strong data-start=\"2420\" data-end=\"2440\">no voting rights<\/strong><\/li>\n<li data-section-id=\"ovlthj\" data-start=\"2441\" data-end=\"2474\">May lack <strong data-start=\"2452\" data-end=\"2474\">information rights<\/strong><\/li>\n<li data-section-id=\"16izvgg\" data-start=\"2475\" data-end=\"2519\">Often rely on side letters for protections<\/li>\n<\/ul>\n<p data-start=\"2521\" data-end=\"2598\">In other words, investors fund the company, but don\u2019t actually own part of it.<\/p>\n<hr data-start=\"2600\" data-end=\"2603\" \/>\n<h2 data-section-id=\"1ddbv2y\" data-start=\"2605\" data-end=\"2643\">Why SAFEs Are Not Safe for Founders<\/h2>\n<p data-start=\"2645\" data-end=\"2711\">SAFEs don\u2019t just hurt investors, they can backfire on founders too.<\/p>\n<h3 data-section-id=\"17ilpoz\" data-start=\"2713\" data-end=\"2748\">The \u201cStacking Dilution\u201d Problem<\/h3>\n<p data-start=\"2750\" data-end=\"2801\">YC\u2019s post-money SAFEs are particularly problematic:<\/p>\n<ul data-start=\"2803\" data-end=\"2978\">\n<li data-section-id=\"1plu93\" data-start=\"2803\" data-end=\"2851\">Each SAFE locks in a percentage of the company<\/li>\n<li data-section-id=\"1ve4f1w\" data-start=\"2852\" data-end=\"2908\">Multiple SAFEs <strong data-start=\"2869\" data-end=\"2908\">stack dilution on top of each other<\/strong><\/li>\n<li data-section-id=\"qukepd\" data-start=\"2909\" data-end=\"2978\">Founders often don\u2019t realise the full impact until the priced round<\/li>\n<\/ul>\n<p data-start=\"2980\" data-end=\"2991\">The result?<\/p>\n<blockquote data-start=\"2993\" data-end=\"3141\">\n<p data-start=\"2995\" data-end=\"3141\">Founders can end up as <strong data-start=\"3018\" data-end=\"3064\">minority shareholders in their own company<\/strong> by the time they raise a priced round.<\/p>\n<\/blockquote>\n<p data-start=\"3143\" data-end=\"3219\">This is one of the most common and painful surprises in startup fundraising.<\/p>\n<hr data-start=\"3221\" data-end=\"3224\" \/>\n<h2 data-section-id=\"zshus9\" data-start=\"3226\" data-end=\"3256\">SAFEs Were a Temporary Hack<\/h2>\n<p data-start=\"3258\" data-end=\"3286\">SAFEs made sense in context:<\/p>\n<ul data-start=\"3288\" data-end=\"3391\">\n<li data-section-id=\"f9dplh\" data-start=\"3288\" data-end=\"3338\">Legal fees for priced rounds were extremely high<\/li>\n<li data-section-id=\"1lvncv7\" data-start=\"3339\" data-end=\"3391\">There was no easy, productised way to issue shares<\/li>\n<\/ul>\n<p data-start=\"3393\" data-end=\"3445\">So instead of fixing the process, SAFEs deferred it:<\/p>\n<blockquote data-start=\"3447\" data-end=\"3541\">\n<p data-start=\"3449\" data-end=\"3541\">\u201cWe\u2019ll give you money now and deal with shares later.\u201d<\/p>\n<\/blockquote>\n<p data-start=\"3543\" data-end=\"3602\">But that shortcut introduced long-term complexity and risk.<\/p>\n<hr data-start=\"3604\" data-end=\"3607\" \/>\n<h2 data-section-id=\"zccmoi\" data-start=\"3609\" data-end=\"3647\">Enter SAFER: The Better Alternative<\/h2>\n<p data-start=\"3649\" data-end=\"3691\">At SeedLegals, we asked a simple question:<\/p>\n<p data-start=\"3693\" data-end=\"3774\"><strong data-start=\"3693\" data-end=\"3774\">What if you could keep the simplicity of a SAFE but issue shares immediately?<\/strong><\/p>\n<p data-start=\"3776\" data-end=\"3807\">That\u2019s exactly what SAFER does.<\/p>\n<hr data-start=\"3809\" data-end=\"3812\" \/>\n<h2 data-section-id=\"1qmfqg\" data-start=\"3814\" data-end=\"3833\">What Is a SAFER?<\/h2>\n<p data-start=\"3835\" data-end=\"3846\">A SAFER is:<\/p>\n<blockquote data-start=\"3848\" data-end=\"3905\">\n<p data-start=\"3850\" data-end=\"3905\"><strong data-start=\"3850\" data-end=\"3905\">\u201cI give you money now, and you give me shares now.\u201d<\/strong><\/p>\n<\/blockquote>\n<p data-start=\"3907\" data-end=\"3974\">But crucially, it preserves the key economic protections of a SAFE.<\/p>\n<hr data-start=\"3976\" data-end=\"3979\" \/>\n<h2 data-section-id=\"wizilz\" data-start=\"3981\" data-end=\"4043\">How SAFER Replicates SAFE Economics (Without the Downsides)<\/h2>\n<h3 data-section-id=\"13em150\" data-start=\"4045\" data-end=\"4079\">1. Valuation Cap Still Applies<\/h3>\n<p data-start=\"4081\" data-end=\"4098\">Just like a SAFE:<\/p>\n<ul data-start=\"4100\" data-end=\"4189\">\n<li data-section-id=\"1yr1ar\" data-start=\"4100\" data-end=\"4141\">Investors invest at a <strong data-start=\"4124\" data-end=\"4141\">valuation cap<\/strong><\/li>\n<li data-section-id=\"abba58\" data-start=\"4142\" data-end=\"4189\">They\u2019re protected if the next round is higher<\/li>\n<\/ul>\n<p data-start=\"4191\" data-end=\"4209\">But unlike a SAFE:<\/p>\n<ul data-start=\"4211\" data-end=\"4260\">\n<li data-section-id=\"1tl3e7r\" data-start=\"4211\" data-end=\"4260\">They receive <strong data-start=\"4226\" data-end=\"4260\">shares immediately at that cap<\/strong><\/li>\n<\/ul>\n<hr data-start=\"4262\" data-end=\"4265\" \/>\n<h3 data-section-id=\"1x28s7\" data-start=\"4267\" data-end=\"4316\">2. Downside Protection via \u201cTop-Up\u201d Mechanism<\/h3>\n<p data-start=\"4318\" data-end=\"4341\">Here\u2019s the clever part.<\/p>\n<p data-start=\"4343\" data-end=\"4402\">If the next round is at a <strong data-start=\"4369\" data-end=\"4401\">lower valuation than the cap<\/strong>:<\/p>\n<ul data-start=\"4404\" data-end=\"4565\">\n<li data-section-id=\"s0x73s\" data-start=\"4404\" data-end=\"4480\">SAFER investors receive additional shares via a <strong data-start=\"4454\" data-end=\"4480\">stock split adjustment<\/strong><\/li>\n<li data-section-id=\"1bpuj4p\" data-start=\"4481\" data-end=\"4565\">This \u201ctops up\u201d their ownership to match what they would have received under a SAFE<\/li>\n<\/ul>\n<blockquote data-start=\"4567\" data-end=\"4714\">\n<p data-start=\"4569\" data-end=\"4714\">\u201cA zero-tax way of giving you more shares to match what you would have gotten if the SAFE converted later.\u201d<\/p>\n<\/blockquote>\n<hr data-start=\"4716\" data-end=\"4719\" \/>\n<h3 data-section-id=\"7u642p\" data-start=\"4721\" data-end=\"4768\">3. Immediate Ownership = Immediate Benefits<\/h3>\n<p data-start=\"4770\" data-end=\"4806\">Because SAFER issues shares upfront:<\/p>\n<p data-start=\"4808\" data-end=\"4822\">Investors get:<\/p>\n<ul data-start=\"4823\" data-end=\"4952\">\n<li data-section-id=\"e9wkzo\" data-start=\"4823\" data-end=\"4854\">QSBS clock starts immediately<\/li>\n<li data-section-id=\"xmmz28\" data-start=\"4855\" data-end=\"4888\">Shareholder rights from day one<\/li>\n<li data-section-id=\"rc9k5s\" data-start=\"4889\" data-end=\"4922\">Downside tax relief eligibility<\/li>\n<li data-section-id=\"1nc6hiu\" data-start=\"4923\" data-end=\"4952\">Full participation in exits<\/li>\n<\/ul>\n<hr data-start=\"4954\" data-end=\"4957\" \/>\n<h3 data-section-id=\"tvyh0h\" data-start=\"4959\" data-end=\"4990\">4. Preferred Stock Included<\/h3>\n<p data-start=\"4992\" data-end=\"5019\">SAFER mirrors expectations:<\/p>\n<ul data-start=\"5021\" data-end=\"5109\">\n<li data-section-id=\"o8z93v\" data-start=\"5021\" data-end=\"5060\">Investors receive <strong data-start=\"5041\" data-end=\"5060\">preferred stock<\/strong><\/li>\n<li data-section-id=\"1eh4bqd\" data-start=\"5061\" data-end=\"5109\">Same as they would expect from SAFE conversion<\/li>\n<\/ul>\n<hr data-start=\"5111\" data-end=\"5114\" \/>\n<h2 data-section-id=\"1hf24ar\" data-start=\"5116\" data-end=\"5151\">Why SAFER Is Better for Founders<\/h2>\n<h3 data-section-id=\"10ugufu\" data-start=\"5153\" data-end=\"5178\">1. No Hidden Dilution<\/h3>\n<p data-start=\"5180\" data-end=\"5210\">SAFER introduces transparency:<\/p>\n<ul data-start=\"5212\" data-end=\"5337\">\n<li data-section-id=\"1t8eox1\" data-start=\"5212\" data-end=\"5262\">Founders declare <strong data-start=\"5231\" data-end=\"5262\">how much they plan to raise<\/strong><\/li>\n<li data-section-id=\"h8cp8i\" data-start=\"5263\" data-end=\"5308\">All SAFERs are issued within that framework<\/li>\n<li data-section-id=\"16mp31l\" data-start=\"5309\" data-end=\"5337\">No hidden stacking effects<\/li>\n<\/ul>\n<hr data-start=\"5339\" data-end=\"5342\" \/>\n<h3 data-section-id=\"1u04hsx\" data-start=\"5344\" data-end=\"5372\">2. Predictable Cap Table<\/h3>\n<p data-start=\"5374\" data-end=\"5407\">Investors and founders can model:<\/p>\n<ul data-start=\"5409\" data-end=\"5469\">\n<li data-section-id=\"1gsov4\" data-start=\"5409\" data-end=\"5432\">Ownership percentages<\/li>\n<li data-section-id=\"1iio7lp\" data-start=\"5433\" data-end=\"5453\">Dilution scenarios<\/li>\n<li data-section-id=\"ijnlq4\" data-start=\"5454\" data-end=\"5469\">Future rounds<\/li>\n<\/ul>\n<p data-start=\"5471\" data-end=\"5490\">No surprises later.<\/p>\n<hr data-start=\"5492\" data-end=\"5495\" \/>\n<h3 data-section-id=\"1jtc5rx\" data-start=\"5497\" data-end=\"5528\">3. Clean, Batched Execution<\/h3>\n<p data-start=\"5530\" data-end=\"5563\">Instead of chaotic SAFE issuance:<\/p>\n<ul data-start=\"5565\" data-end=\"5682\">\n<li data-section-id=\"1minwxa\" data-start=\"5565\" data-end=\"5610\">SAFERs are grouped into a <strong data-start=\"5593\" data-end=\"5610\">defined round<\/strong><\/li>\n<li data-section-id=\"1x50uzs\" data-start=\"5611\" data-end=\"5644\">Share issuances are <strong data-start=\"5633\" data-end=\"5644\">batched<\/strong><\/li>\n<li data-section-id=\"ewmewt\" data-start=\"5645\" data-end=\"5682\">Filing and compliance are automated<\/li>\n<\/ul>\n<hr data-start=\"5684\" data-end=\"5687\" \/>\n<h2 data-section-id=\"z6wg6w\" data-start=\"5689\" data-end=\"5738\">Productised Fundraising: The Real Breakthrough<\/h2>\n<p data-start=\"5740\" data-end=\"5812\">The original reason for SAFEs &#8211; avoiding legal complexity &#8211; is now obsolete.<\/p>\n<p data-start=\"5814\" data-end=\"5860\">SeedLegals has productised the entire process:<\/p>\n<ul data-start=\"5862\" data-end=\"5999\">\n<li data-section-id=\"1hws58w\" data-start=\"5862\" data-end=\"5889\">Board approvals automated<\/li>\n<li data-section-id=\"10mtpxw\" data-start=\"5890\" data-end=\"5921\">Documents e-signed in minutes<\/li>\n<li data-section-id=\"nv7m9k\" data-start=\"5922\" data-end=\"5957\">Share issuance handled seamlessly<\/li>\n<li data-section-id=\"110w5o4\" data-start=\"5958\" data-end=\"5999\">Delaware filings integrated and batched<\/li>\n<\/ul>\n<blockquote data-start=\"6001\" data-end=\"6137\">\n<p data-start=\"6003\" data-end=\"6137\">\u201cIt\u2019s not kicking the can down the road, it\u2019s productising and automating the issuing of shares.\u201d<\/p>\n<\/blockquote>\n<hr data-start=\"6139\" data-end=\"6142\" \/>\n<h2 data-section-id=\"9d6z9t\" data-start=\"6144\" data-end=\"6177\">SAFER vs SAFE: The Big Picture<\/h2>\n<div class=\"TyagGW_tableContainer\">\n<div class=\"group TyagGW_tableWrapper flex flex-col-reverse w-fit\" tabindex=\"-1\">\n<table class=\"w-fit min-w-(--thread-content-width)\" data-start=\"6179\" data-end=\"6475\">\n<thead data-start=\"6179\" data-end=\"6205\">\n<tr data-start=\"6179\" data-end=\"6205\">\n<th class=\"\" data-start=\"6179\" data-end=\"6189\" data-col-size=\"sm\">Feature<\/th>\n<th class=\"\" data-start=\"6189\" data-end=\"6196\" data-col-size=\"sm\">SAFE<\/th>\n<th class=\"\" data-start=\"6196\" data-end=\"6205\" data-col-size=\"sm\">SAFER<\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"6233\" data-end=\"6475\">\n<tr data-start=\"6233\" data-end=\"6272\">\n<td data-start=\"6233\" data-end=\"6249\" data-col-size=\"sm\">Shares issued<\/td>\n<td data-start=\"6249\" data-end=\"6257\" data-col-size=\"sm\">Later<\/td>\n<td data-start=\"6257\" data-end=\"6272\" data-col-size=\"sm\">Immediately<\/td>\n<\/tr>\n<tr data-start=\"6273\" data-end=\"6312\">\n<td data-start=\"6273\" data-end=\"6286\" data-col-size=\"sm\">QSBS clock<\/td>\n<td data-start=\"6286\" data-end=\"6298\" data-col-size=\"sm\">Uncertain<\/td>\n<td data-start=\"6298\" data-end=\"6312\" data-col-size=\"sm\">Starts now<\/td>\n<\/tr>\n<tr data-start=\"6313\" data-end=\"6354\">\n<td data-start=\"6313\" data-end=\"6331\" data-col-size=\"sm\">Investor rights<\/td>\n<td data-start=\"6331\" data-end=\"6341\" data-col-size=\"sm\">Limited<\/td>\n<td data-start=\"6341\" data-end=\"6354\" data-col-size=\"sm\">Immediate<\/td>\n<\/tr>\n<tr data-start=\"6355\" data-end=\"6390\">\n<td data-start=\"6355\" data-end=\"6369\" data-col-size=\"sm\">Exit upside<\/td>\n<td data-start=\"6369\" data-end=\"6377\" data-col-size=\"sm\">Risky<\/td>\n<td data-start=\"6377\" data-end=\"6390\" data-col-size=\"sm\">Protected<\/td>\n<\/tr>\n<tr data-start=\"6391\" data-end=\"6437\">\n<td data-start=\"6391\" data-end=\"6410\" data-col-size=\"sm\">Founder dilution<\/td>\n<td data-start=\"6410\" data-end=\"6422\" data-col-size=\"sm\">Can stack<\/td>\n<td data-start=\"6422\" data-end=\"6437\" data-col-size=\"sm\">Transparent<\/td>\n<\/tr>\n<tr data-start=\"6438\" data-end=\"6475\">\n<td data-start=\"6438\" data-end=\"6451\" data-col-size=\"sm\">Complexity<\/td>\n<td data-start=\"6451\" data-end=\"6462\" data-col-size=\"sm\">Deferred<\/td>\n<td data-start=\"6462\" data-end=\"6475\" data-col-size=\"sm\">Automated<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<hr data-start=\"6477\" data-end=\"6480\" \/>\n<h2 data-section-id=\"ttwgqx\" data-start=\"6482\" data-end=\"6520\">The Future of Early-Stage Investing<\/h2>\n<p data-start=\"6522\" data-end=\"6534\">For decades:<\/p>\n<ul data-start=\"6536\" data-end=\"6579\">\n<li data-section-id=\"f77vok\" data-start=\"6536\" data-end=\"6579\">Investors gave money and received shares.<\/li>\n<\/ul>\n<p data-start=\"6581\" data-end=\"6605\">Then for a short period:<\/p>\n<ul data-start=\"6607\" data-end=\"6656\">\n<li data-section-id=\"j9jp3t\" data-start=\"6607\" data-end=\"6656\">Investors gave money and received IOUs (SAFEs).<\/li>\n<\/ul>\n<p data-start=\"6658\" data-end=\"6674\">Now, with SAFER:<\/p>\n<ul data-start=\"6676\" data-end=\"6761\">\n<li data-section-id=\"stgbd7\" data-start=\"6676\" data-end=\"6761\">We return to <strong data-start=\"6691\" data-end=\"6717\">ownership from day one<\/strong>\u2014but with modern flexibility and automation.<\/li>\n<\/ul>\n<blockquote data-start=\"6763\" data-end=\"6915\">\n<p data-start=\"6765\" data-end=\"6915\">\u201cFor 50 years, people invested and got shares\u2026 then for 10 years they got IOUs\u2026 and then they got shares again.\u201d<\/p>\n<\/blockquote>\n<hr data-start=\"6917\" data-end=\"6920\" \/>\n<h2 data-section-id=\"8dtpi\" data-start=\"6922\" data-end=\"6935\">Conclusion<\/h2>\n<p data-start=\"6937\" data-end=\"6989\">SAFEs solved a real problem\u2014but introduced new ones:<\/p>\n<ul data-start=\"6991\" data-end=\"7075\">\n<li data-section-id=\"15i4wwl\" data-start=\"6991\" data-end=\"7010\">Tax uncertainty<\/li>\n<li data-section-id=\"1hysaxj\" data-start=\"7011\" data-end=\"7029\">Lack of rights<\/li>\n<li data-section-id=\"16peqwa\" data-start=\"7030\" data-end=\"7049\">Hidden dilution<\/li>\n<li data-section-id=\"10hdoxt\" data-start=\"7050\" data-end=\"7075\">Misaligned incentives<\/li>\n<\/ul>\n<p data-start=\"7077\" data-end=\"7108\">SAFER fixes these by combining:<\/p>\n<ul data-start=\"7110\" data-end=\"7193\">\n<li data-section-id=\"gqujbz\" data-start=\"7110\" data-end=\"7137\">The simplicity of SAFEs<\/li>\n<li data-section-id=\"1yvrenq\" data-start=\"7138\" data-end=\"7165\">The certainty of equity<\/li>\n<li data-section-id=\"1fdj8t4\" data-start=\"7166\" data-end=\"7193\">The power of automation<\/li>\n<\/ul>\n<p data-start=\"7195\" data-end=\"7269\">The result is a cleaner, safer, and more transparent way to fund startups.<\/p>\n<hr data-start=\"7271\" data-end=\"7274\" \/>\n<p data-start=\"7276\" data-end=\"7340\">If SAFEs were version 1.0 of startup fundraising simplification,<\/p>\n<p data-start=\"7342\" data-end=\"7367\" data-is-last-node=\"\" data-is-only-node=\"\"><strong data-start=\"7342\" data-end=\"7367\" data-is-last-node=\"\">SAFER is version 2.0.<\/strong><\/p>\n"}],"blog_layout":"v2","v2":{"hero":{"image_background_color":"#E7F1FF","image_fit":"img--contain"},"adverts":false,"related_sidebar_posts":false},"show_author_card":false,"revision_date":"","hero_image":430413,"video_category_post_fields":{"video_listing_page_featured_image":false},"has_custom_post_authors":false,"is_expert_reviewed":false,"has_sources":false},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SAFEs are not safe. 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Tools like OpenClaw can automate tasks, connect APIs, and dramatically speed up workflows \u2014 from coding to research to operations.<br \/>\nBut with great power comes a new set of risks. When <\/p>\n","protected":false},"author":3,"featured_media":430396,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141,157],"tags":[],"event_tags":[],"class_list":["post-430391","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us","category-videos"],"acf":{"related_posts":false,"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p data-start=\"115\" data-end=\"372\">AI agents are quickly becoming one of the most powerful tools available for marketing outreach, personal assistants, and more. Tools like OpenClaw can automate tasks, connect APIs, and dramatically speed up workflows \u2013 from coding to research to operations.<\/p>\n<p data-start=\"374\" data-end=\"563\">But with great power comes a new set of risks. When AI agents are able to run commands, access data, and integrate with multiple services, it&#8217;s essential to use them safely and responsibly.<\/p>\n<p data-start=\"565\" data-end=\"697\">So I got together with OpenClaw expert <a href=\"https:\/\/www.linkedin.com\/in\/cspathis\/\" target=\"_blank\" rel=\"noopener\">Gus Spathis<\/a> from <a href=\"https:\/\/xogito.com\" target=\"_blank\" rel=\"noopener\">Xogito<\/a> to discuss agentic AI tools like OpenClaw and how to use them safely.<\/p>\n<p data-start=\"699\" data-end=\"865\">Here\u2019s the recording of our webinar, followed by a summary of the key takeaways, along with practical tips for safely experimenting with OpenClaw and other AI agents.<\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"How to set up and use OpenClaw\" src=\"https:\/\/player.vimeo.com\/video\/1172875453?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n<div contenteditable=\"false\">\n<hr \/>\n<\/div>\n<h2 data-start=\"81\" data-end=\"102\"><strong data-start=\"81\" data-end=\"102\">What is OpenClaw?<\/strong><\/h2>\n<p data-start=\"104\" data-end=\"232\">OpenClaw is an AI-powered developer agent designed to automate workflows and interact with AI models such as Anthropic\u2019s Claude.<\/p>\n<p data-start=\"234\" data-end=\"304\">Instead of simply asking a chatbot questions, tools like OpenClaw can:<\/p>\n<ul data-start=\"306\" data-end=\"464\">\n<li data-section-id=\"103up8d\" data-start=\"306\" data-end=\"336\">\n<p data-start=\"308\" data-end=\"336\">Execute tasks across tools<\/p>\n<\/li>\n<li data-section-id=\"15hyvfl\" data-start=\"337\" data-end=\"350\">\n<p data-start=\"339\" data-end=\"350\">Call APIs<\/p>\n<\/li>\n<li data-section-id=\"1mnm71y\" data-start=\"351\" data-end=\"388\">\n<p data-start=\"353\" data-end=\"388\">Assist with development workflows<\/p>\n<\/li>\n<li data-section-id=\"xkmk96\" data-start=\"389\" data-end=\"417\">\n<p data-start=\"391\" data-end=\"417\">Automate repetitive work<\/p>\n<\/li>\n<li data-section-id=\"112r5cy\" data-start=\"418\" data-end=\"464\">\n<p data-start=\"420\" data-end=\"464\">Coordinate multiple AI prompts and outputs<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"466\" data-end=\"573\">This makes them far more powerful than a traditional chatbot, but also means they should be used carefully.<\/p>\n<h2 data-start=\"580\" data-end=\"613\"><strong data-start=\"580\" data-end=\"613\">Why AI Agents Need Guardrails<\/strong><\/h2>\n<p data-start=\"615\" data-end=\"672\">AI agents often have access to sensitive systems such as:<\/p>\n<ul data-start=\"674\" data-end=\"785\">\n<li data-section-id=\"1rfcp4s\" data-start=\"674\" data-end=\"702\">\n<p data-start=\"676\" data-end=\"702\">Source code repositories<\/p>\n<\/li>\n<li data-section-id=\"d8xbtp\" data-start=\"703\" data-end=\"729\">\n<p data-start=\"705\" data-end=\"729\">Internal documentation<\/p>\n<\/li>\n<li data-section-id=\"ouoyf2\" data-start=\"730\" data-end=\"754\">\n<p data-start=\"732\" data-end=\"754\">Cloud infrastructure<\/p>\n<\/li>\n<li data-section-id=\"1q027x0\" data-start=\"755\" data-end=\"767\">\n<p data-start=\"757\" data-end=\"767\">API keys<\/p>\n<\/li>\n<li data-section-id=\"breeik\" data-start=\"768\" data-end=\"785\">\n<p data-start=\"770\" data-end=\"785\">Customer data<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"787\" data-end=\"832\">If configured incorrectly, an AI agent could:<\/p>\n<ul data-start=\"834\" data-end=\"964\">\n<li data-section-id=\"op77ez\" data-start=\"834\" data-end=\"864\">\n<p data-start=\"836\" data-end=\"864\">Leak sensitive information<\/p>\n<\/li>\n<li data-section-id=\"1rneo91\" data-start=\"865\" data-end=\"896\">\n<p data-start=\"867\" data-end=\"896\">Execute unintended commands<\/p>\n<\/li>\n<li data-section-id=\"1xa8huz\" data-start=\"897\" data-end=\"925\">\n<p data-start=\"899\" data-end=\"925\">Access data it shouldn\u2019t<\/p>\n<\/li>\n<li data-section-id=\"1wzxkt1\" data-start=\"926\" data-end=\"964\">\n<p data-start=\"928\" data-end=\"964\">Introduce security vulnerabilities<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"966\" data-end=\"1089\">For startups moving quickly, the temptation is to experiment freely. But a few simple safeguards can make a big difference.<\/p>\n<h2 data-start=\"1096\" data-end=\"1154\"><strong data-start=\"1096\" data-end=\"1154\">7 Tips for Safely Using OpenClaw and Similar AI Agents<\/strong><\/h2>\n<h4 data-start=\"1156\" data-end=\"1200\"><strong data-start=\"1156\" data-end=\"1200\">1. Never Give AI Agents Your Root Access<\/strong><\/h4>\n<p data-start=\"1202\" data-end=\"1256\">Avoid giving agents full admin access to systems like:<\/p>\n<ul data-start=\"1258\" data-end=\"1310\">\n<li data-section-id=\"16yifd9\" data-start=\"1258\" data-end=\"1265\">\n<p data-start=\"1260\" data-end=\"1265\">AWS<\/p>\n<\/li>\n<li data-section-id=\"1fo7lkd\" data-start=\"1266\" data-end=\"1276\">\n<p data-start=\"1268\" data-end=\"1276\">GitHub<\/p>\n<\/li>\n<li data-section-id=\"1hdzuf2\" data-start=\"1277\" data-end=\"1290\">\n<p data-start=\"1279\" data-end=\"1290\">Databases<\/p>\n<\/li>\n<li data-section-id=\"1wytpr8\" data-start=\"1291\" data-end=\"1310\">\n<p data-start=\"1293\" data-end=\"1310\">Payment systems<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"1312\" data-end=\"1400\">Instead, create restricted API keys and limited permissions specifically for AI tooling.<\/p>\n<p data-start=\"1402\" data-end=\"1499\">Think of AI agents like junior developers: powerful, but they shouldn\u2019t have unrestricted access.<\/p>\n<h4 data-start=\"1506\" data-end=\"1538\"><strong data-start=\"1506\" data-end=\"1538\">2. Use a Sandbox Environment<\/strong><\/h4>\n<p data-start=\"1540\" data-end=\"1592\">Before connecting an AI agent to production systems:<\/p>\n<ul data-start=\"1594\" data-end=\"1681\">\n<li data-section-id=\"1w72iq9\" data-start=\"1594\" data-end=\"1630\">\n<p data-start=\"1596\" data-end=\"1630\">Test it in a staging environment<\/p>\n<\/li>\n<li data-section-id=\"fhuyua\" data-start=\"1631\" data-end=\"1653\">\n<p data-start=\"1633\" data-end=\"1653\">Use dummy datasets<\/p>\n<\/li>\n<li data-section-id=\"9t6reg\" data-start=\"1654\" data-end=\"1681\">\n<p data-start=\"1656\" data-end=\"1681\">Limit write permissions<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"1683\" data-end=\"1751\">This lets you experiment safely without risking live infrastructure.<\/p>\n<h4 data-start=\"1758\" data-end=\"1786\"><strong data-start=\"1758\" data-end=\"1786\">3. Protect Your API Keys<\/strong><\/h4>\n<p data-start=\"1788\" data-end=\"1855\">Many AI tools require access to services like Claude or other APIs.<\/p>\n<p data-start=\"1857\" data-end=\"1880\">Best practices include:<\/p>\n<ul data-start=\"1882\" data-end=\"2052\">\n<li data-section-id=\"1e8hd5g\" data-start=\"1882\" data-end=\"1921\">\n<p data-start=\"1884\" data-end=\"1921\">Store keys in environment variables<\/p>\n<\/li>\n<li data-section-id=\"mgwi9t\" data-start=\"1922\" data-end=\"1973\">\n<p data-start=\"1924\" data-end=\"1973\">Use secret managers (e.g., AWS Secrets Manager)<\/p>\n<\/li>\n<li data-section-id=\"1aq80u2\" data-start=\"1974\" data-end=\"1999\">\n<p data-start=\"1976\" data-end=\"1999\">Rotate keys regularly<\/p>\n<\/li>\n<li data-section-id=\"iuh3vy\" data-start=\"2000\" data-end=\"2052\">\n<p data-start=\"2002\" data-end=\"2052\">Avoid embedding keys directly in prompts or code<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"2054\" data-end=\"2121\">Never paste sensitive credentials directly into AI chat interfaces.<\/p>\n<h4 data-start=\"2128\" data-end=\"2166\"><strong data-start=\"2128\" data-end=\"2166\">4. Monitor What the Agent Is Doing<\/strong><\/h4>\n<p data-start=\"2168\" data-end=\"2221\">Agents that run commands should have logging enabled.<\/p>\n<p data-start=\"2223\" data-end=\"2249\">You should be able to see:<\/p>\n<ul data-start=\"2251\" data-end=\"2354\">\n<li data-section-id=\"1a61fy0\" data-start=\"2251\" data-end=\"2280\">\n<p data-start=\"2253\" data-end=\"2280\">What prompts are executed<\/p>\n<\/li>\n<li data-section-id=\"8996wv\" data-start=\"2281\" data-end=\"2302\">\n<p data-start=\"2283\" data-end=\"2302\">What commands run<\/p>\n<\/li>\n<li data-section-id=\"1ighyob\" data-start=\"2303\" data-end=\"2328\">\n<p data-start=\"2305\" data-end=\"2328\">Which APIs are called<\/p>\n<\/li>\n<li data-section-id=\"1nuxtsd\" data-start=\"2329\" data-end=\"2354\">\n<p data-start=\"2331\" data-end=\"2354\">What data is accessed<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"2356\" data-end=\"2422\">If something goes wrong, logs are essential for diagnosing issues.<\/p>\n<h4 data-start=\"2429\" data-end=\"2455\"><strong data-start=\"2429\" data-end=\"2455\">5. Limit Data Exposure<\/strong><\/h4>\n<p data-start=\"2457\" data-end=\"2537\">Avoid connecting AI agents to large internal knowledge bases without safeguards.<\/p>\n<p data-start=\"2539\" data-end=\"2547\">Instead:<\/p>\n<ul data-start=\"2549\" data-end=\"2659\">\n<li data-section-id=\"1aq43fl\" data-start=\"2549\" data-end=\"2579\">\n<p data-start=\"2551\" data-end=\"2579\">Provide scoped data access<\/p>\n<\/li>\n<li data-section-id=\"3awxsd\" data-start=\"2580\" data-end=\"2612\">\n<p data-start=\"2582\" data-end=\"2612\">Redact sensitive information<\/p>\n<\/li>\n<li data-section-id=\"oepetk\" data-start=\"2613\" data-end=\"2659\">\n<p data-start=\"2615\" data-end=\"2659\">Use retrieval layers that filter documents<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"2661\" data-end=\"2743\">Remember: anything the AI agent can read could potentially be surfaced in outputs.<\/p>\n<h4 data-start=\"2750\" data-end=\"2787\"><strong data-start=\"2750\" data-end=\"2787\">6. Validate Outputs Before Acting<\/strong><\/h4>\n<p data-start=\"2789\" data-end=\"2846\">Even powerful AI models can hallucinate or make mistakes.<\/p>\n<p data-start=\"2848\" data-end=\"2910\">Before letting an agent automatically execute actions such as:<\/p>\n<ul data-start=\"2912\" data-end=\"2977\">\n<li data-section-id=\"hjpd1q\" data-start=\"2912\" data-end=\"2930\">\n<p data-start=\"2914\" data-end=\"2930\">Deploying code<\/p>\n<\/li>\n<li data-section-id=\"1urxo6j\" data-start=\"2931\" data-end=\"2949\">\n<p data-start=\"2933\" data-end=\"2949\">Sending emails<\/p>\n<\/li>\n<li data-section-id=\"lfxxh7\" data-start=\"2950\" data-end=\"2977\">\n<p data-start=\"2952\" data-end=\"2977\">Updating infrastructure<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"2979\" data-end=\"3017\">Make sure a human approves the action.<\/p>\n<p data-start=\"3019\" data-end=\"3068\">A human-in-the-loop model is still best practice.<\/p>\n<h4 data-start=\"3075\" data-end=\"3125\"><strong data-start=\"3075\" data-end=\"3125\">7. Stay Aware of Licensing and Branding Issues<\/strong><\/h4>\n<p data-start=\"3127\" data-end=\"3222\">One interesting issue discussed during the conversation was naming conflicts with AI platforms.<\/p>\n<p data-start=\"3224\" data-end=\"3337\">For example, some projects originally named after specific AI models had to be renamed due to trademark concerns.<\/p>\n<p data-start=\"3339\" data-end=\"3396\">If you&#8217;re building AI tools on top of third-party models:<\/p>\n<ul data-start=\"3398\" data-end=\"3513\">\n<li data-section-id=\"qaj9aw\" data-start=\"3398\" data-end=\"3446\">\n<p data-start=\"3400\" data-end=\"3446\">Avoid using their brand in your product name<\/p>\n<\/li>\n<li data-section-id=\"lx3qxs\" data-start=\"3447\" data-end=\"3482\">\n<p data-start=\"3449\" data-end=\"3482\">Review their developer policies<\/p>\n<\/li>\n<li data-section-id=\"ufn61m\" data-start=\"3483\" data-end=\"3513\">\n<p data-start=\"3485\" data-end=\"3513\">Check trademark guidelines<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"3515\" data-end=\"3558\">This helps avoid legal complications later.<\/p>\n<h2 data-start=\"3565\" data-end=\"3597\"><strong data-start=\"3565\" data-end=\"3597\">The Opportunity for Startups<\/strong><\/h2>\n<p data-start=\"3599\" data-end=\"3665\">AI agents like OpenClaw represent a new layer of the AI ecosystem.<\/p>\n<p data-start=\"3667\" data-end=\"3749\">While large companies build foundation models, startups are increasingly building:<\/p>\n<ul data-start=\"3751\" data-end=\"3854\">\n<li data-section-id=\"aza5xw\" data-start=\"3751\" data-end=\"3771\">\n<p data-start=\"3753\" data-end=\"3771\">Developer agents<\/p>\n<\/li>\n<li data-section-id=\"150dj4f\" data-start=\"3772\" data-end=\"3801\">\n<p data-start=\"3774\" data-end=\"3801\">Workflow automation tools<\/p>\n<\/li>\n<li data-section-id=\"yh2llu\" data-start=\"3802\" data-end=\"3825\">\n<p data-start=\"3804\" data-end=\"3825\">AI-powered copilots<\/p>\n<\/li>\n<li data-section-id=\"f9hx8b\" data-start=\"3826\" data-end=\"3854\">\n<p data-start=\"3828\" data-end=\"3854\">Vertical AI applications<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"3856\" data-end=\"3989\">For founders, the opportunity is enormous, but success will depend on building tools that are secure, reliable, and trusted by users.<\/p>\n<h2 data-start=\"3996\" data-end=\"4014\"><strong data-start=\"3996\" data-end=\"4014\">Final Thoughts<\/strong><\/h2>\n<p data-start=\"4016\" data-end=\"4193\">AI agents like OpenClaw are opening a new chapter in software development. They can automate work, accelerate experimentation, and unlock powerful new capabilities for startups.<\/p>\n<p data-start=\"4195\" data-end=\"4264\">But as with any powerful technology, the key is using it responsibly.<\/p>\n<p data-start=\"4266\" data-end=\"4482\">By following a few simple principles \u2013 limited permissions, strong logging, secure key management, and human oversight \u2013 founders can safely explore the potential of AI agents while protecting their systems and data.<\/p>\n<p data-start=\"4484\" data-end=\"4607\">The startups that master this balance will be the ones best positioned to build the next generation of AI-powered products.<\/p>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. 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LinkedIn for fundraising"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>Forward-thinking profile fixes, posting guidance, cold outreach advice \u2013 the Scribe team show you how to use LinkedIn to your advantage as a founder. <\/p>\n","protected":false},"author":183,"featured_media":429235,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141,157],"tags":[],"event_tags":[],"class_list":["post-431121","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us","category-videos"],"acf":{"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">LinkedIn can feel like a crowded marketplace, packed with pitching, scrolling and connecting. But, if you\u2019re fundraising, it\u2019s one of the clearest shop windows you\u2019ve got. And by looking at your profile, investors can decide if your message is worth replying to. <a href=\"https:\/\/www.linkedin.com\/company\/scribelabsai\/\" target=\"_blank\" rel=\"noopener\">Scribe<\/a> Co-Founder <a href=\"https:\/\/www.linkedin.com\/in\/rob-cossins\/\" target=\"_blank\" rel=\"noopener\">Rob Cossins<\/a> and Sales Lead <a href=\"https:\/\/www.linkedin.com\/in\/ekaterinamanoilenko\/\" target=\"_blank\" rel=\"noopener\">Ekky Manoilenko<\/a> dissect how founders can turn their profiles into a credible investor landing page.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Watch the session below to make LinkedIn work for your raise, not against it.<\/span><\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"Mastering LinkedIn for fundraising\" src=\"https:\/\/player.vimeo.com\/video\/1127574326?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n"},{"acf_fc_layout":"text","text":"<h2><b>Key takeaways<\/b><\/h2>\n<h3><b>LinkedIn is an investors \u2018first impression\u2019<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Early-stage angel investing is personal. Investors will often check your LinkedIn before replying, as they often want to quickly judge if you look credible and investable. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your profile needs to communicate commitment (you\u2019re all-in on the venture) and capability (you\u2019ve got the skills and experience to execute). <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors tend to scan for signals like network size (aim for 500+), mutual connections, relevant experience, clarity of communication and focus (no clutter that makes your priorities look split).\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>Build a founder profile that\u2019s credible and on-brand<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Treat the top of your profile like a landing page: it needs a strong banner (product or brand colors), a founder-friendly headline, and a photo that fits the vibe of the business you\u2019re building.\u00a0 <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Keep the \u2018about\u2019 section skimmable, as long blocks of text get ignored, especially by busy investors. Highlight tangible achievements and make them punchy.\u00a0 <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reduce anything that muddies the story, like multiple roles or \u2018full-time job + startup on the side\u2019, which can make investors doubt your conviction (even if your reasons are totally valid).\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>Post consistently to compound trust<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Stop chasing virality and instead focus on demonstrating progress. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Momentum aids you in building credibility and widening investor discovery, helping people feel like they know you before you\u2019ve ever even met. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A useful rule of thumb: clients first, investors second. If your content is aimed at customers and the market, it usually reads as more authentic.\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>Talk about fundraising without killing the vibe<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors respond well to content that indicates traction, such as milestones (launches, hires), market insights, and the startup vision. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You can post that you\u2019re fundraising, but use scarcity and social proof (eg. % of round filled and time remaining), and avoid making it look like a never-ending campaign. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If you are going to share fundraising updates, make the \u2018why invest\u2019 story feel inevitable, not uncertain.\u00a0<\/span><\/li>\n<\/ul>\n<p><b>Build an investor pipeline with warm routes first, then scale cold outreach<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The strongest early investor sources usually start warm: personal network, founder-to-founder introductions, clients and events. Many angels won\u2019t advertize that they invest so you often meet them indirectly. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A practical tactic: message founders slightly ahead of you in your sector, invite them for a drink\/dinner, then ask for intros to their investors afterwards. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For cold outreach, relevance matters more than volume. Target investors that have been active recently in your space and ask permission before sending your deck. Consider video to make the outreach feel more human.<\/span><\/li>\n<\/ul>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. 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In this webinar, Anthony Rose and Roland Siebelink explain why momentum and strong fundamentals create long-term advantage for founders.<\/p>\n","protected":false},"author":194,"featured_media":428792,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141,147,157],"tags":[],"event_tags":[],"class_list":["post-431107","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us","category-startup-guides-us","category-videos"],"acf":{"related_posts":false,"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p>Many startups don\u2019t fail because of one bad decision. They stall because too many small things don\u2019t quite work together.<\/p>\n<p>Founders often underestimate how early choices around product, team, fundraising, and execution stack up over time. Without momentum, small inefficiencies compound just as quickly as good decisions, making growth harder as the company scales.<\/p>\n<p>In this webinar, <a href=\"https:\/\/seedlegals.com\/resources\/author\/anthony\/#:~:text=Anthony%20is%20our%20CEO%20and,social%20TV%20and%20online%20communities.\" target=\"_blank\" rel=\"noopener\">Anthony Rose<\/a>, CEO of SeedLegals, and <a href=\"https:\/\/www.linkedin.com\/in\/rolandsiebelink\/\" target=\"_blank\" rel=\"noopener\">Roland Siebelink<\/a>, founder of <a href=\"https:\/\/www.midstage.org\/\" target=\"_blank\" rel=\"noopener\">Midstage Institute<\/a>, unpack the idea of the compounding startup. They explain how steady progress, smart early decisions, and maintaining momentum can create long-term advantages that compound as the company grows.<\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"The compounding startup\" src=\"https:\/\/player.vimeo.com\/video\/1136451809?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n"},{"acf_fc_layout":"text","text":"<h1><b>Key takeaways\u00a0<\/b><\/h1>\n<h3><b>Compounding is built through consistent, repeatable actions<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Startup success is rarely the result of one big moment; it comes from small improvements made consistently.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Repeating good decisions around product, hiring, and execution creates momentum that accelerates over time.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Founders should focus on systems and habits that scale, not one-off wins.<\/span><\/li>\n<\/ul>\n<h3><b>Early-stage decisions shape long-term outcomes<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Choices made early, from company structure to fundraising approach, influence every future stage of growth.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fixing weak foundations later is slower, more expensive, and more distracting.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Thinking a few steps ahead helps founders avoid compounding problems as the business scales.<\/span><\/li>\n<\/ul>\n<h3><b>Momentum is a strategic advantage<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Startups that keep moving forward learn faster and adapt more effectively.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Progress builds confidence internally and externally, helping with hiring, fundraising, and partnerships.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Waiting for perfect information often slows compounding effects.<\/span><\/li>\n<\/ul>\n<h3><b>Strong fundamentals make scaling easier<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Clear ownership, aligned incentives, and simple processes reduce friction as teams grow.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Operational clarity allows founders to focus on growth rather than constant problem-solving.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Getting the basics right early creates space for compounding success later on.<\/span><\/li>\n<\/ul>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":"default","gtm_form_location":"default"}},"add_shadow":true}],"blog_layout":"v2","v2":{"hero":{"image_background_color":"#E7F1FF","image_fit":"img--cover"},"adverts":[{"type":"selector","selected_advert":{"ID":412056,"post_author":"77","post_date":"2024-11-11 09:42:57","post_date_gmt":"2024-11-11 09:42:57","post_content":"","post_title":"US - Newsletter","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"us-talk-to-the-team","to_ping":"","pinged":"","post_modified":"2024-11-13 16:07:38","post_modified_gmt":"2024-11-13 16:07:38","post_content_filtered":"","post_parent":0,"guid":"https:\/\/seedlegals.com\/?post_type=blog_advert&#038;p=412056","menu_order":0,"post_type":"blog_advert","post_mime_type":"","comment_count":"0","filter":"raw"},"custom_advert":{"advert_tracking_id":"","layout":"default","image":{"image":false,"link":""},"text":{"heading":"","content":"","button":null,"background_color":"#EEF4FF","text_color":"#000646"},"form":{"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":false,"gtm_form_location":false}},"cta_and_testimonials":{"heading":"","button":null,"bullet_points":false,"testimonials":false}}}],"related_sidebar_posts":false},"show_author_card":false,"revision_date":"","hero_image":428787,"video_category_post_fields":{"video_listing_page_featured_image":428793},"has_custom_post_authors":true,"is_expert_reviewed":true,"has_sources":false,"custom_post_authors":{"authors":[{"author":{"ID":3,"user_firstname":"Anthony","user_lastname":"Rose","nickname":"Anthony","user_nicename":"anthony","display_name":"Anthony Rose","user_email":"anthony@seedlegals.com","user_url":"","user_registered":"2019-10-18 15:42:52","user_description":"","user_avatar":"<img alt='' src='https:\/\/secure.gravatar.com\/avatar\/eec24f24334b9a815c127811f69deccd9cf669083b239a62f3a4c38997362003?s=96&#038;d=mm&#038;r=g' srcset='https:\/\/secure.gravatar.com\/avatar\/eec24f24334b9a815c127811f69deccd9cf669083b239a62f3a4c38997362003?s=192&#038;d=mm&#038;r=g 2x' class='avatar avatar-96 photo' height='96' width='96' loading='lazy' decoding='async'\/>"},"role":""}]},"expert_reviewed":{"heading":"Expert reviewed","tooltip_message":"This article has been fact-checked by a SeedLegals subject matter expert.<br><br><a href=\"https:\/\/seedlegals.com\/authors-and-experts\/\" target=\"_blank\">Meet our experts<\/a> and learn more about our review process and quality assurance in our <a href=\"https:\/\/seedlegals.com\/editorial-policy\/\" target=\"_blank\">editorial policy<\/a>."}},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The compounding startup: how small decisions create long-term advantage. | SeedLegals<\/title>\n<meta name=\"description\" content=\"Discover how small, consistent decisions compound over time to shape startup success. 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year, new raise \u2013 How to get ahead in 2026"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>SeedLegals CEO Anthony Rose shares tips on fundraising in 2026 and explains the traps that founders need to avoid. <\/p>\n","protected":false},"author":183,"featured_media":428761,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141],"tags":[],"event_tags":[],"class_list":["post-430014","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us"],"acf":{"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">The new year can bring a fresh runway \u2013 but it\u2019s crucial to remember that the ground rules are shifting fast in 2026.\u00a0 <\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">AI is making it cheaper (and faster) to build almost anything, which means investors are less impressed by \u201cwe\u2019ve built a product\u201d and more focused on whether you can prove demand, win distribution, and tell a story that sticks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">SeedLegals CEO <a href=\"https:\/\/seedlegals.com\/resources\/author\/anthony\/\" target=\"_blank\" rel=\"noopener\">Anthony Rose<\/a> is here to give you the lowdown on what \u2018investor-ready\u2019 really looks like now. Find out why your website matters more than you think (because it\u2019s basically your first investor meeting); why raising too much too early can slow you down for months; and why, if you\u2019re pre-traction, you\u2019ll often get further faster with angels than trying to convince VCs to take a punt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Watch the full webinar below.<\/span><\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"New year, new raise! How to get ahead in 2026\" src=\"https:\/\/player.vimeo.com\/video\/1146971268?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n"},{"acf_fc_layout":"text","text":"<h2><b>Key takeaways<\/b><\/h2>\n<h3><b>AI is changing what investors value (and what they expect you to do before you raise)<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As AI brings down the cost of building software, the product isn\u2019t the value anymore \u2013 investors care more about distribution, customers, network effects, idea quality and team strength than the code itself. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The bar for early-stage founders rises: if it\u2019s cheaper and faster to build, investors increasingly expect you to get to market sooner, with more proof, before they\u2019ll pay up on valuation. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You need to show there\u2019s something real behind your AI tool usage \u2013 not just a generated business with little substance.\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>Your website is your first investor meeting<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors will Google you \u2013 so not having a website is an instant negative signal, especially since you can now create one quickly. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Adopt tools like Lovable to sharpen your positioning: spell out the problem you\u2019re solving, break down how your product works and add clear CTAs, before tweaking the output to ensure it reflects what\u2019s true.\u00a0 <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A downside to vibe-coded sites is that, if yours resembles every other template, it can accidentally signal low IP\/low defensibility \u2013 make it visually and conceptually different from what\u2019s already out there. <\/span><\/li>\n<\/ul>\n<h3><b>\u2018Seed-strapping\u2019 sounds great \u2013 but don\u2019t pitch it to investors<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bootstrapping is great for control and simplicity, but it caps growth unless you\u2019re able to fund it comfortably yourself \u2013 that\u2019s usually where fundraising becomes the rational next step. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The idea of \u2018seed-strapping\u2019 (raise once, never again) can be a useful discipline to avoid the constant fundraising treadmill, but it might make you uninvestable if you say it outright. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This is because investors need a path to returns and, if you show them you\u2019re a \u2018one round only\u2019 founder, you\u2019re also warning there may be no clear plan for how investors get their money back.\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>Rethink your fundraising strategy<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Angels are usually the right first port of call \u2013 try to avoid going to VCs too soon if you\u2019re pre-revenue\/pre-users, as the default answer is often \u201ccome back later\u201d.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Asking for too much can trap you. A big raise implies a big valuation, and then you\u2019re competing with companies that already have traction. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You may not need the full amount in the bank from day one. With <\/span><a href=\"https:\/\/seedlegals.com\/resources\/seedfast-is-the-new-seed-round\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">\u2018agile\u2019 fundraising<\/span><\/a><span style=\"font-weight: 400;\">, you can raise enough to start hiring and building, keep momentum, and adjust your message depending on whether investors are committing now or telling you to find a <\/span><a href=\"https:\/\/seedlegals.com\/resources\/how-to-find-a-lead-investor\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">lead investor<\/span><\/a><span style=\"font-weight: 400;\"> first. <\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<\/ul>\n<p><b>Protect founder control\u00a0<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">After 3 rounds, aim for roughly 15% dilution per round, so founders still hold a majority later \u2013 if you dilute 20-25% repeatedly, founders can become minority shareholders in their own company.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Governance matters as much as equity. Founders should outnumber investors on the board because misalignment shows up when things get hard or exits are on the table. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In the US, use incentives like <\/span><a href=\"https:\/\/seedlegals.com\/us\/start\/qsbs\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">QSBS<\/span><\/a><span style=\"font-weight: 400;\"> to your advantage (and <\/span><a href=\"https:\/\/seedlegals.com\/start\/seis-eis\/?utm_source=chatgpt.com\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">SEIS\/EIS<\/span><\/a><span style=\"font-weight: 400;\"> in the UK). Some US investors will push for a <\/span><a href=\"https:\/\/seedlegals.com\/grow\/delaware-flip\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Delaware C-Corp \/ flip<\/span><\/a><span style=\"font-weight: 400;\"> \u2013 doing it earlier can be simpler than scrambling later mid-raise.\u00a0<\/span><\/li>\n<\/ul>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions. We\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. 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Fundraising 101"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>US tax perks, Delaware Flips and QSBS \u2013 SeedLegals CEO Anthony Rose spotlights the top things that early-stage founders actually need to know to raise in the US. <\/p>\n","protected":false},"author":183,"featured_media":428746,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141,157,311],"tags":[],"event_tags":[],"class_list":["post-431183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us","category-videos","category-us-expansion-us"],"acf":{"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">Raising in the US can get slower, pricier and way more stressful than it needs to be. So it\u2019s time to map out the most founder-friendly route with SeedLegals CEO <a href=\"https:\/\/seedlegals.com\/resources\/author\/anthony\/\" target=\"_blank\" rel=\"noopener\">Anthony Rose<\/a>.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Learn how to set up the right structure, use investor tax incentives to make your funding round more attractive, and understand the hidden rules that can quietly change your dilution, taxes, and investor appeal.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Want to avoid the VC &#8220;come back later&#8221; trap? Check out the recording below.\u00a0<\/span><\/p>\n<div style=\"padding: 56.25% 0 0 0; position: relative;\"><iframe style=\"position: absolute; top: 0; left: 0; width: 100%; height: 100%;\" title=\"US Fundraising 101 with Anthony Rose\" src=\"https:\/\/player.vimeo.com\/video\/1139250751?badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479\" frameborder=\"0\"><\/iframe><\/div>\n<p><script src=\"https:\/\/player.vimeo.com\/api\/player.js\"><\/script><\/p>\n"},{"acf_fc_layout":"text","text":"<h2><b>Key takeaways<\/b><\/h2>\n<h3><b>Keep fundraising friction-free with the right US company structure<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">LLCs might be useful in the earlier stages as pass-through losses can offset your personal income tax \u2013 but they\u2019re not investor-friendly because they don\u2019t operate like share-based companies. <\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If you\u2019re planning to raise soon, it\u2019s usually simpler and cheaper to incorporate as a C-Corp from day one \u2013 especially if you want to issue SAFEs or other equity-like instruments. <\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For state choice, the practical advice is: go Delaware. Most investors and lawyers expect it and the legal framework is well understood, reducing friction and resultant investor drop-off.\u00a0 <\/span><\/li>\n<\/ul>\n<h3><b>Use US tax incentives as a real fundraising advantage<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/seedlegals.com\/us\/start\/qsbs\/\" target=\"_blank\" rel=\"noopener\">QSBS<\/a> (Qualified Small Business Stock) can make your startup dramatically more attractive: hold stock long enough, and investors (and founders) may pay no federal capital gains tax up to a certain limit. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Most early-stage startups qualify for QSBS unless they\u2019re in certain excluded sectors, and the qualification generally holds until you hit a higher asset threshold. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Section 1244 loss relief is the underused \u2018downside protection\u2019 story. If the company fails, eligible investors can potentially write off losses against income tax (not just capital gains), up to an annual cap. <\/span><\/li>\n<\/ul>\n<h3><b>SAFEs are fast \u2013 but you should understand the hidden trade-offs<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">SAFEs removed the huge legal overhead of priced rounds, which is why they dominate early-stage US fundraising \u2013 but they also create uncertainty and rights gaps for investors. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">There\u2019s a real gray area around QSBS timing with SAFEs: does the \u2018clock\u2019 start when the SAFE is signed, or only when it converts into shares? The lack of a clear ruling means investors may take different stances.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Pre-money SAFEs behave differently \u2013\u00a0 the key point is to track dilution like a hawk and don\u2019t treat SAFEs as valuation-free fundraising.<\/span><\/li>\n<\/ul>\n<h3><b>You need an instantly understandable pitch\u00a0<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If your deck\/website leads with \u201cAI + blockchain revolutionising X,\u201d you\u2019re forcing investors to do work. Lead with the painful problem followed by who it\u2019s for, and <\/span><i><span style=\"font-weight: 400;\">then<\/span><\/i><span style=\"font-weight: 400;\"> explain the tech.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Build everything around a clear and real user archetype and use visuals that make the product obvious at a glance. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tools (eg. vibe-coding) can help you iterate quickly, but the product may look cheap if the site looks too templated. Polish acts as a credibility marker. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Content is marketing, but it\u2019s also something that helps you clarify your message and build authority. <\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<\/ul>\n<h3><b>Fundraising is really about targeting and gaining momentum<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If you\u2019re pre-product or pre-revenue, most VCs will say \u2018come back later\u2019 \u2013 this could be because you\u2019re too early for their fund economics or because they don\u2019t understand your story well enough to take the risk. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Avoid sending your deck too early \u2013 if they ghost you, you won\u2019t know why. A call lets you tailor the pitch to what that specific investor cares about. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Valuation needs to match the market: too low signals unnecessary dilution and too high can lead investors to assume something\u2019s off. Use common patterns and treat valuation as a negotiation starting point, not a vanity metric. <\/span><\/li>\n<\/ul>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"hubspot","hubspot_form":{"layout":"default","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"21723609-6f1b-45c0-9691-77d462dc3bed","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. 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taxes and reporting: What founders need to know"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"<p>Starting a company is exciting \u2013 but alongside the challenge of building your business comes the task of keeping on top of taxes and annual reporting.<br \/>\nFor many founders, this is where things get overwhelming. That\u2019s because in the US, there are a few layers of rules and filings to keep on top of<\/p>\n","protected":false},"author":195,"featured_media":428347,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141],"tags":[],"event_tags":[],"class_list":["post-428342","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us"],"acf":{"blog_layout":"v2","v2":{"hero":{"image_background_color":"#E7F1FF","image_fit":"img--cover"},"adverts":[{"type":"selector","selected_advert":{"ID":412063,"post_author":"77","post_date":"2024-11-11 09:44:14","post_date_gmt":"2024-11-11 09:44:14","post_content":"","post_title":"US - Start free","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"us-start-free","to_ping":"","pinged":"","post_modified":"2024-11-13 16:18:26","post_modified_gmt":"2024-11-13 16:18:26","post_content_filtered":"","post_parent":0,"guid":"https:\/\/seedlegals.com\/?post_type=blog_advert&#038;p=412063","menu_order":0,"post_type":"blog_advert","post_mime_type":"","comment_count":"0","filter":"raw"},"custom_advert":{"advert_tracking_id":"","layout":"default","image":{"image":false,"link":""},"text":{"heading":"","content":"","button":null,"background_color":"#EEF4FF","text_color":"#000646"},"form":{"form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. View our <a href=\"\/privacy-policy\/\" target=\"_blank\" rel=\"noopener noreferrer\">privacy policy<\/a>"},"custom":{"embed":""},"gtm_form_type":false,"gtm_form_location":false}},"cta_and_testimonials":{"heading":"","button":null,"bullet_points":false,"testimonials":false}}}],"related_sidebar_posts":false},"show_author_card":false,"revision_date":"","hero_image":428347,"has_custom_post_authors":true,"custom_post_authors":{"authors":[{"author":{"ID":169,"user_firstname":"Idin","user_lastname":"Sabahipour","nickname":"Idin Sabahipour","user_nicename":"idin-sabahipour","display_name":"Idin Sabahipour","user_email":"idin@seedlegals.com","user_url":"","user_registered":"2024-08-29 09:55:07","user_description":"","user_avatar":"<img alt='' src='https:\/\/secure.gravatar.com\/avatar\/45fe33a1de890806e7ec6d8ac105288d6228c292c65cf28e96818af3496fd572?s=96&#038;d=mm&#038;r=g' srcset='https:\/\/secure.gravatar.com\/avatar\/45fe33a1de890806e7ec6d8ac105288d6228c292c65cf28e96818af3496fd572?s=192&#038;d=mm&#038;r=g 2x' class='avatar avatar-96 photo' height='96' width='96' loading='lazy' decoding='async'\/>"},"role":"Copywriter"}]},"is_expert_reviewed":true,"expert_reviewed":{"heading":"Expert reviewed","tooltip_message":"This article has been fact-checked by a SeedLegals subject matter expert.<br><br><a href=\"https:\/\/seedlegals.com\/authors-and-experts\/\" target=\"_blank\">Meet our experts<\/a> and learn more about our review process and quality assurance in our <a href=\"https:\/\/seedlegals.com\/editorial-policy\/\" target=\"_blank\">editorial policy<\/a>."},"post_content_width":"default","post_content":[{"acf_fc_layout":"text","text":"<p><span style=\"font-weight: 400;\">Starting a company is exciting \u2013 but alongside the challenge of building your business comes the task of keeping on top of taxes and annual reporting.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For many founders, this is where things get overwhelming. That\u2019s because in the US, there are a few layers of rules and filings to keep on top of: federal, state, and sometimes even city rules. And each comes with its own forms, deadlines, and penalties for missing them.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this guide, we\u2019ll take you step by step through what you need to do to stay compliant from day one without losing focus on building your company.<\/span><\/p>\n<h2><b>Step 1: Choose the right company structure<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Your tax obligations depend heavily on the type of entity you set up:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>C-corporation (C-corp):<\/b><span style=\"font-weight: 400;\"> This is the most common choice for venture-backed companies. A C-corp pays tax on its own profits. If the company then distributes some of those profits to shareholders as dividends, they also pay tax on that income. This is called \u201cdouble taxation\u201d. Most VCs will expect a C-corp structure that\u2019s incorporated in Delaware.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Limited Liability Company (LLC):<\/b><span style=\"font-weight: 400;\"> They\u2019re flexible and simple to run. Instead of the company paying income tax itself, the profits (or losses) \u201cflow through\u201d to the owners, who then report them on their personal tax returns. So you don\u2019t have the \u201cdouble taxation\u201d of a C-corp because the money is only taxed once. But when you try to raise money from VCs, most will prefer (or even require) you to convert to a C-corp, since it\u2019s easier to issue stock and manage investor rights. If you\u2019re already structured as an LLC, here\u2019s <\/span><a href=\"https:\/\/seedlegals.com\/us\/resources\/how-to-convert-your-llc-into-a-c-corp\/\"><span style=\"font-weight: 400;\">how you can convert to a C-corp<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>S-corporation (S-corp):<\/b><span style=\"font-weight: 400;\"> The S-corp structure also avoids double taxation by passing profits (or losses) directly through to the owners, similar to an LLC. Shareholders report their share of the profit on their personal tax returns. But S-corps have strict ownership rules. For example, you can\u2019t have shareholders from outside the US, and you\u2019re limited to 100 shareholders in total. So, they usually aren\u2019t a fit for startups planning to raise venture funding.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">So, in most cases a Delaware C-corp will be the way to go. But whichever structure you choose, here are a few more things you\u2019ll need to do.<\/span><\/p>\n<h3><strong>File incorporation documents in your state<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">To legally create your company, you need to file formation paperwork with the Secretary of State (or equivalent) in your chosen state.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, for a Delaware C-corp, you\u2019d file a Certificate of Incorporation (sometimes called Articles of Incorporation) with the Delaware Secretary of State.\u00a0<\/span><\/p>\n<h3><strong>Get an Employer Identification Number (EIN) from the IRS<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">This is like a Social Security Number for your business \u2013 it\u2019s how the IRS tracks your company for tax purposes. You\u2019ll need an EIN to open a business bank account, hire employees, and file taxes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can <\/span><a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/get-an-employer-identification-number\"><span style=\"font-weight: 400;\">apply for one on the IRS website<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><strong>Keep up with annual state filings<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Most states require businesses to file some kind of report every year or every second year. You\u2019ll also need to pay a fee to stay in good standing. For example, for a Delaware C-corp you\u2019ll need to file a franchise tax report (and make a payment) every year.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Missing these filings can result in late fees, penalties, or even the state revoking your company\u2019s right to do business.<\/span><\/p>\n<h3><strong>Register in any other states where you\u2019re \u201cdoing business\u201d (known as foreign qualification)<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">\u201cDoing business\u201d generally means having an office, employees, or a significant physical presence in another state.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if you incorporate a C-corp in Delaware but run your operations from California, you\u2019ll need to file a Delaware franchise tax filing and a California Statement of Information, plus pay any California state taxes due.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Each state has its own rules and fees, so it\u2019s worth checking before hiring or opening an office in a new state.<\/span><\/p>\n<h2><b>Step 2: Set up your finance systems<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Solid financial foundations will save you headaches at tax time. Plus, it will make fundraising much easier later.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are some of the essential steps you should take.<\/span><\/p>\n<h3><strong>Open a separate business bank account<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Never mix personal and business money. A dedicated account makes it clear which expenses belong to the company, which is important for taxes, protecting yourself from personal liability, and credibility with investors.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most banks will ask for your incorporation documents and EIN to open the account \u2013 we covered those in Step 1 above.<\/span><\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"When you\u2019re picking a bank to open a business account, make sure it\u2019s one that will integrate easily with your accounting software.","link":null},{"acf_fc_layout":"text","text":"<h3><strong>Use accounting software to track income and expenses<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Don\u2019t rely on spreadsheets \u2013 you\u2019ll outgrow them fast.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Modern accounting tools (like QuickBooks, Xero, or Wave) automatically sync with your bank and credit card accounts, making it easier to categorize transactions and generate reports.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This also reduces the amount you\u2019ll spend on accountants.<\/span><\/p>\n<h3><strong>Prepare regular financial statements<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">At a minimum, you\u2019ll want to generate:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">an income statement (profit and loss) showing revenue and expenses over a period, and<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">a balance sheet showing assets, liabilities, and equity at a point in time.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">If you\u2019ve got your accounting software set up, you can do this in just a few clicks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These reports aren\u2019t just for tax filings \u2013 investors (and lenders) will want to see them too.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even if you\u2019re pre-revenue, creating these reports builds financial discipline and helps you understand your company\u2019s burn rate.<\/span><\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"<b>Why clean books matter<\/b><br \/>\r\nMessy records make tax season stressful and costly. Clean, reconciled books can save you money in accounting fees and make fundraising due diligence much smoother.<br \/>\r\nAlso, even early-stage companies can be audited. Keeping organized records from the start makes the process less painful if the IRS or your state comes knocking.","link":null},{"acf_fc_layout":"text","text":"<h2><b>Step 3: Establish <\/b><b>all<\/b> <b>your tax obligations<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">As a founder, you\u2019ll have to navigate a mix of taxes.<\/span><\/p>\n<h3><strong>Federal and state income tax<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">C-corps file their own corporate tax returns and pay tax directly on the profits they make. LLCs and S-corps are \u201cpass-through\u201d entities. This means the profits made through them are reported on the owners\u2019 personal tax returns.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On top of federal tax, almost every state (and some cities) levy their own income tax, with their own filing rules.<\/span><\/p>\n<h3><strong>Payroll taxes (if you employ staff)<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">As an employer you must withhold federal and state income tax, plus Social Security and Medicare (FICA), from employee paychecks.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Then you\u2019ll need to remit those amounts to the IRS and your state tax authority. You\u2019ll also pay the employer share of FICA and unemployment taxes.<\/span><\/p>\n<h3><strong>Self-employment tax (if you\u2019re a sole proprietor or in a partnership)<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Founders who pay themselves directly (rather than through a company payroll) must pay self-employment tax, which covers both the employer and employee portions of Social Security and Medicare.<\/span><\/p>\n<h3><strong>Sales tax<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you sell products or taxable services, you may need to charge sales tax to customers and send it to the state.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The rules differ by state \u2013 and in many places, you might owe sales tax even if you don\u2019t have an office there. If you exceed a certain revenue or transaction threshold in that state, that could be enough to trigger it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Just making enough sales or having enough customers in that state.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you sell goods or provide taxable services, you may need to collect sales tax from your customers and remit this to the state. The rules for this are varied \u2013 and in many states, \u201ceconomic nexus\u201d applies, meaning you can be liable even without a physical office, if you exceed a certain revenue or transaction threshold in that state.<\/span><\/p>\n<h3><strong>Local taxes<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Some cities and counties impose additional levies, such as gross receipts tax (on revenue) or personal property tax (on business assets like computers and furniture).<\/span><\/p>\n<h3><strong>Withholding tax on payments to non-US contractors or licensors<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you pay someone outside the US (for example, a foreign consultant or an overseas licensing agreement), you may be required to withhold US tax and remit it to the IRS.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, there could be a tax treaty which reduces or eliminates this.<\/span><\/p>\n<h3><strong>Cross-border and transfer pricing issues<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If your company has entities in other countries, the IRS expects you to set prices between them as if they were independent businesses \u2013 also called \u201carm\u2019s length\u201d pricing. In practice, it means you can\u2019t just shift profits or costs between your US company and a foreign subsidiary to lower your tax bill.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This usually only becomes an issue once you set up subsidiaries abroad, but it\u2019s smart to keep in mind early if you\u2019re planning to expand internationally.<\/span><\/p>\n<h3><strong>Let\u2019s run through an example\u2026<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Let\u2019s say your startup is incorporated as a C-corp in Delaware with employees in Texas and you make sales to customers in New York.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At the minimum, you\u2019ll probably need to:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>File a Delaware franchise tax and annual report.<\/b><span style=\"font-weight: 400;\"> This is the state\u2019s way of charging companies that are incorporated there.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>File Texas employer payroll tax returns.<\/b><span style=\"font-weight: 400;\"> Since you have employees in Texas, you\u2019re responsible for withholding and paying over payroll taxes to the state.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Collect and remit New York sales tax once you hit the state\u2019s threshold.<\/b><span style=\"font-weight: 400;\"> Even without an office in New York, crossing the revenue or customer threshold can create a tax obligation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>File a federal corporate income tax return. <\/b><span style=\"font-weight: 400;\">Every corporation must file one each year with the IRS, regardless of state filings.<\/span><\/li>\n<\/ol>\n<h2><b>Step 4: See if you can benefit from any deductions or credits<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Startups can often reduce their tax bill through deductions and credits.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But you\u2019ll first need to know about them \u2013 and sometimes you need to claim them proactively.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are the main ones to watch.<\/span><\/p>\n<h3><strong>Ordinary business expenses<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Most everyday costs of running your company are deductible, meaning they reduce your taxable profit.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This can include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Office rent or coworking space<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Software subscriptions (e.g. AWS, Slack, QuickBooks)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Travel costs for business trips<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Professional services (lawyers, accountants, consultants)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Marketing and advertising<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">For example, if you spend $20,000 on software and professional services in your first year, those costs can reduce your taxable income by $20,000.<\/span><\/p>\n<h3><strong>Startup cost deduction<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">In your first year, you can deduct up to $5,000 of startup expenses \u2013 the costs you paid to get your business off the ground before it officially began operating.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This can include things like market research, travel to meet potential partners, legal and accounting fees, and your incorporation costs.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once your business has started trading, later expenses are treated as ordinary business deductions instead.<\/span><\/p>\n<h3><strong>R&amp;D tax credit<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you\u2019re developing new products, technology, or processes, you may qualify for a research and development credit.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The big benefit is that even if you\u2019re not profitable yet, you can apply the credit to offset payroll taxes, which saves cash right away.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, let\u2019s say a pre-revenue software startup spends $150,000 on engineers building its product. It may qualify for between $10,000 and $20,000 in annual payroll tax savings under the R&amp;D credit.<\/span><\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"<b>\ud83d\udcbb The R&D credit isn\u2019t just for big companies with labs.<\/b><br \/>\r\nIf your engineers or developers are building new features, experimenting with tech, or solving technical challenges, those costs might qualify.","link":null},{"acf_fc_layout":"text","text":"<h3><strong>Work Opportunity Tax Credit (WOTC)<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">This credit is available if you hire employees from certain targeted groups, such as veterans, people who\u2019ve been unemployed long-term, or people receiving government assistance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The value of the credit depends on the group and how many hours the employee works, but it\u2019s typically up to $2,400 per eligible employee. In some cases (for example, hiring certain veterans), it can be worth significantly more.<\/span><\/p>\n<h3><strong>Green energy credits<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If your company invests in renewable energy (like installing solar panels at your office), you may be eligible for some federal or state green energy incentives.<\/span><\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"<b>\ud83d\udca1 Don\u2019t wait to claim credits<\/b><br \/>\r\nFor a lot of tax credits, you have to apply for them and keep records as you go. <br \/>\r\nFor example, the R&D credit requires documentation of eligible projects and expenses. And the WOTC credit requires forms to be submitted shortly after hiring.<br \/>\r\nSo, don\u2019t wait until year-end to ask your accountant \u2013 that could be too late. <br \/>\r\nMake sure you flag these opportunities from early on so you\u2019ve got a better chance of claiming them.","link":null},{"acf_fc_layout":"text","text":"<h2><b>Step 5: Track your filing deadlines<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Tax deadlines arrive earlier and more often than most founders expect. Missing them can mean penalties and interest, even if you didn\u2019t owe much tax in the first place.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, keep an eye out for these.<\/span><\/p>\n<h3><strong>Quarterly estimated tax payments<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you expect your business will owe tax for the year, you may need to make estimated payments instead of waiting until year-end.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For C-corps, the threshold is owing $500 or more in federal tax. For individuals (including LLCs or S-corps taxed as pass-throughs), it\u2019s $1,000 or more.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Payments are typically due four times a year: April, June, September, and January. Some states also have their own quarterly payment requirements too.<\/span><\/p>\n<h3><strong>Annual tax returns<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you\u2019re set up as a C-corp, you\u2019ll usually file <\/span><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-1120\"><span style=\"font-weight: 400;\">Form 1120<\/span><\/a><span style=\"font-weight: 400;\"> with the IRS each year. LLCs and S-corps file different forms, depending on their tax election.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Also, each state will have their own returns, deadlines, and extensions \u2013 these often don\u2019t line up exactly with federal dates.<\/span><\/p>\n<h3><strong>Form 1099s and W-2s<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you pay independent contractors, you must issue them a <\/span><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-1099-nec\"><span style=\"font-weight: 400;\">Form 1099-NEC<\/span><\/a><span style=\"font-weight: 400;\"> by 31 January each year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Employees get a <\/span><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-w-2\"><span style=\"font-weight: 400;\">Form W-2<\/span><\/a><span style=\"font-weight: 400;\">, also due to them and the IRS by 31 January.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Missing these deadlines creates penalties based on each form missed, which can add up quickly if you have a big team.<\/span><\/p>\n<h3><strong>Withholding reports on payments to non-US persons<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you pay a foreign contractor or licensor, US tax may need to be withheld from those payments. You\u2019re responsible for depositing that tax with the IRS and filing the required annual forms.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These are <\/span><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-1042-s\"><span style=\"font-weight: 400;\">Form 1042-S<\/span><\/a><span style=\"font-weight: 400;\"> to report the payment to the foreign person, and <\/span><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-1042\"><span style=\"font-weight: 400;\">Form 1042<\/span><\/a><span style=\"font-weight: 400;\"> to summarise all the payments for the year.<\/span><\/p>\n<h3><strong>Annual state filings<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Each state has its own requirements for you to \u201ckeep in good standing\u201d. These are often separate from tax returns.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, Delaware requires a franchise tax report and payment, typically due 1 March. And California requires an annual Statement of Information and minimum franchise tax.<\/span><\/p>\n<h3><strong>Let\u2019s run through an example\u2026<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you run a Delaware-incorporated C-corp with contractors in New York, you might face:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Delaware franchise tax and report (1 March)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Federal corporate return (15 April)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">State income tax returns (dates vary)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">1099s for New York contractors (31 January)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Missing any one of these filings, even if no tax is due, can result in penalties, interest, and unnecessary admin to fix your company\u2019s standing.<\/span><\/p>\n<h2><b>Step 6: Understand how equity impacts your tax position<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Equity decisions affect more than just ownership \u2013 they can also have big tax consequences for you and your team.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are some areas founders should know about.<\/span><\/p>\n<h3><strong>83(b) election (critical for founders and early employees)<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If you receive restricted stock that vests over time (but not options), you must file an 83(b) election with the IRS within 30 days of the grant. This lets you pay tax on the shares\u2019 current value (often close to $0) rather than on their future, higher value as the company grows.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if you get founder shares worth $0.001 each and file the 83(b) election straight away, you pay almost no tax today. If you don\u2019t file and those shares are later worth $1 each when they vest, you\u2019ll owe tax on the $1 per share \u2013 even though you haven\u2019t sold them.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We\u2019ve written <\/span><a href=\"https:\/\/seedlegals.com\/us\/resources\/what-is-an-83b-election-and-when-do-i-need-one\/\"><span style=\"font-weight: 400;\">a full guide on 83(b) elections and when you need them<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><strong>Cap table management<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">A cap table shows who owns what percentage of your company. It\u2019s your company\u2019s \u201csource of truth\u201d for share ownership, and it\u2019s vital for both compliance and fundraising. If your records are messy, you could run into problems with IRS audits, state filings, or investor reporting.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Founders often start with spreadsheets but quickly outgrow them. Dedicated platforms like <\/span><a href=\"https:\/\/seedlegals.com\/us\/start\/cap-table\/\"><span style=\"font-weight: 400;\">SeedLegals\u2019 cap table tool<\/span><\/a><span style=\"font-weight: 400;\"> make it easy to keep everything accurate and automatically up to date.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Check out <\/span><a href=\"https:\/\/seedlegals.com\/us\/resources\/cap-table-what-it-is-and-why-you-need-one\/\"><span style=\"font-weight: 400;\">our guide to what cap tables are (and how to set one up)<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><strong>SAFE notes and convertible debt<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">These are common fundraising tools, but they have tax implications.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, depending on how they\u2019re structured, there may be withholding or reporting obligations when they convert into equity.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The rules vary, so flag these early with your accountant to avoid any tax surprises down the line.<\/span><\/p>\n<h3><strong>Qualified Small Business Stock (QSBS)<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If your startup is a C-corp and meets certain conditions, your shares may qualify as QSBS.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This could allow you to sell them without paying any capital gains tax (up to $10 million in gains) after holding them for five years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But you must meet the IRS requirements from day one, so don\u2019t leave this unchecked. We\u2019ve got a <\/span><a href=\"https:\/\/seedlegals.com\/us\/resources\/qsbs-for-founders\/\"><span style=\"font-weight: 400;\">QSBS guide for founders<\/span><\/a><span style=\"font-weight: 400;\">, so make sure you check that out.<\/span><\/p>\n<h2><b>Step 7: Get expert help and plan ahead<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Taxes and reporting can get complicated fast. Even experienced founders set up strong foundations early and lean on expert help to get it right.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s what that looks like in practice.<\/span><\/p>\n<h3><strong>Get the basics right early<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Open your business bank account, set up accounting software, and keep your cap table up to date. These are the building blocks that make tax filings and investor reporting easier down the road.<\/span><\/p>\n<h3><strong>Hire a tax advisor who understands startups<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">US tax rules are complex, and the wrong setup can be expensive to unwind. An advisor who regularly works with startups can help you stay compliant and spot opportunities like R&amp;D credits or QSBS eligibility.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you\u2019re looking for support, <\/span><a href=\"mailto:shilpa.ajmera@claconnect.com\"><span style=\"font-weight: 400;\">reach out to CLA<\/span><\/a><span style=\"font-weight: 400;\"> \u2013 they\u2019re an accounting firm with a lot of startup experience.<\/span><\/p>\n<h3><strong>Plan ahead for deadlines<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Don\u2019t leave filings to the last minute.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Create a compliance calendar of key dates, like tax returns, payroll filings, franchise taxes, and W-2 deadlines. Make sure you review this each quarter.<\/span><\/p>\n<p><b>Focus on building, not paperwork<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Your accountant can help with your taxes. But for legal documents, fundraising and cap table management, SeedLegals has you covered.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Book a call below, or <\/span><a href=\"https:\/\/app.seedlegals.com\/signup\"><span style=\"font-weight: 400;\">start your 7-day free trial today<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n"},{"acf_fc_layout":"form","layout":"custom","heading":"Get answers fast, for free","content":"Bring all your questions - we\u2019ve got the answers!\r\nWe\u2019ll match you with the right specialist.","custom":{"image":false,"button_text":"Get Started","form":{"type":"none","hubspot_form":{"layout":"newsletter","hide_founderinvestor_toggle":false,"default_community":"founder","custom_form_id":"","gdpr_disclaimer":"By subscribing, you agree to receive information from SeedLegals. You can unsubscribe anytime. 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