Incorporation and the Delaware C-corp

The first corporate decision that actually matters is not your logo or your repo name. It is which legal entity you create, in which jurisdiction, and how you issue stock. Get that wrong and every later SAFE, option grant and Series A turns into a cleanup project. Get it right and the paperwork becomes boring — which is exactly what you want.

Venture investors underwrite thousands of companies with the same template: a Delaware C-corporation, founder common stock with vesting, IP assigned into the company, and a clean board. This is the map of that template. It is not legal advice.

Concepts in this section

Read them in order. Each one is a piece of a company that can raise.

As an early employee reading an offer, ask: is this a Delaware C-corp? Is there a real cap table system (Carta, Pulley)? Were contractor assignments done? Those questions predict whether your options sit on clean common stock or on a mess that will be renegotiated at the next financing.

As a founder, treat incorporation as infrastructure, then raise on SAFEs or notes without reopening corporate identity. At formation the board is often just the founders; later, control terms in preferred rounds add investor directors and protective provisions. Keep the minute book current so Series A counsel gets a folder, not Slack archaeology.

Common mistakes

• Wrong entity. An LLC with SAFE-like instruments stapled on becomes the round's critical path.
• Handshake stock. No purchase agreement, no ledger, no 83(b).
• IP still with people. Contractors never signed; v1 lived on an employer's laptop.
• Broken authorization. More shares promised than the charter allows.

Key takeaways

• Venture-backed startups standardize on Delaware C-corps because funds need preferred stock, option pools and familiar law — not because an LLC is illegal.
• Authorize a large share count (often 10 million); founders purchase common at par under restricted stock agreements with repurchase and vesting.
• PIIAs move IP into the company; without them, diligence fails.
• Use Atlas, Clerky or Cooley GO for vanilla setups; hire counsel for flips, prior IP, multi-party history or priced rounds.

Further learning

Sam Altman's How to Start a Startup series includes a still-useful walkthrough of formation, equity and early mechanics from YC's then-CFO and GC — watch it once before you sign anything irreversible:

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Next, founder equity and vesting.