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Comment by kposehn | Hacker News Reader

Kirsty rocks, for the record.

What surprised me is the claim "Y Combinator and most investors will only invest in companies that have been in incorporated in Delaware, and many founders don’t know this."

This was quite surprising. PG: is this actually a criteria instead of a just preference? Or did TC get it wrong?

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Allow me to give you an illustration of how things work within YC:

How would I know? Ask Kirsty.

Ha! Will do :)

Applying to YC as a non-DE company does not reduce your chances of being interviewed or accepted. However for us to be able to invest in so many companies in such a short time frame, we do require you to convert to a DE C-Corp if we agree to fund you. I'll help you with that though, if the time comes!

Kirsty ~ Do you allow your startups to execute the formation/conversion documents with electronic signature services like HelloSign & Echosign or do you require actual hard signatures?

We try to do everything through e-signatures - less chances of PDFs getting lost than bits of paper. And of course at all opportunities I tell founders to use Hellosign :-)

The only document that is wet signed is the 83(b) election that is sent to the IRS since they not sure yet about e-signatures.

It seem strange that you should select Delaware as your standard, given that you require your companies to be in California -- incorporating in Delaware is dishonest when you are not actually there.

Incorporating in Delaware is standard practice for any US corporation. Not only are there tax and legal advantages, but since everyone else incorporates in Delaware, Delaware case law is extraordinarily mature, so legal risks are minimized. It may seem dishonest to the uninitiated, but the people who specialize in such things are well aware of Delaware.

Companies can incorporate wherever works for them ie Delaware. If they are actually doing business in CA then they register as a foreign entity with CA (Foreign because they incorporated in DE) so there is nothing dishonest about it.

"How would I know? Ask Kirsty."

Serious question here. Does YC get audited? Who verifies that the right thing is happening with your money? I'm basing this question by the way on my many many years in business in seeing what happens when the type of trust that you seem to put in Kirsty is displayed and all she does for YC. (This is not specific to her integrity since I don't know her other than what I read in the article).

Is there a similar preference for investing in European startups? Do VCs and/or angel investors strongly prefer to invest in e.g. a UK Ltd. instead of a company incorporated in the Netherlands?

YC(ie kirsty) will make you change to a delaware C-corp, possibly with your existing non-US company as a subsidiary. The Levys will make you transfer all IP to the new corp.

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