[_--__--__]

Incorporating in Delaware was initially attractive because of usury laws that matter to a small number of business sectors.

The charitable take is that most corporations want to comply with a state's regulations because unintentional compliance violations are painful and expensive, and it is relatively easy to be confident that you are compliant as a Delaware corp.

[eichin]

When I last did it, there were two wins for a tech startup incorporating in delaware:

* it's easy and well-documented - the main thing you have to remember is to check the boxes that say this is an actual company, and not a holding company for a boat (where the real tax dodging is)

* it was reported to make acquisitions easier (as the company acquiring you would either also be a Delaware corp or it would be more straightforward even if they weren't.)

[kube-system]

Yes it is highly preferable for mergers/acquisitions/financing because the law is well established and widely known in those industries.

If you run into some legal question somewhere down the line, investors and their lawyers will be much more comfortable with Delaware law than some other state who may not have clear language on the books and/or have never tested that particular situation in court before.

[detourdog]

That is really a wild thing. A culture of legal belief based on precedent. It's as if one is joining a club that has rules of business conduct clearly documented.

[kelnos]

That doesn't seem wild at all. Laws are written by humans, and, as such, there's inherent ambiguity.

Given that, would you rather have a case tried in a court that has only tried a handful of other cases, or would you rather be in a court that has handled a mountain of cases, with lots of information as to what the law really means, as it has played out in real-life scenarios?

Being tried under a legal regime where there is a ton of past history seems a lot easier to reason about than one where there isn't much.

> It's as if one is joining a club that has rules of business conduct clearly documented.

Well, yes. The law is the law, sure, but the "documentation" is much more than just the law, as written.

[detourdog]

It's wild because the obvious choice to me would be to incorporate in the state or commonwealth where the primary work is done. Choosing to incorporate in state that is nothing more than choice of court system to be bound to me is not obvious.

Many people in this thread cite most court systems are the same yet some people choose to incorporate in Delaware. I happen to be incorporated in Massachusetts because that is where I live.

[sidewndr46]

That is basically how the entire common law system works in North America. Except in the places not using common law

[kube-system]

Is it any more wild than a system where ambiguity is decided at random by whichever judge you happen to have?

[Quarrel]

Agree with your take, very similar to what I heard.

However, we were strongly told that for early stage startups, some (CA) VCs would only bother looking at CA or DE companies.

[kelnos]

Not sure about initially, but the big benefit to Delaware today is essentially network effects: so many companies are and have been incorporated in Delaware that there is a mountain of case law and precedent, so corporate legal teams can have a very good idea of how rulings will go if the company is taken to court under Delaware law. The state's judicial system is also set up very well at this point to handle the cases put in front of it.

(It also doesn't hurt that most businesses also find Delaware's business law to be reasonably fair and advantageous. Musk notwithstanding, of course.)