For years, the answer was automatic: yes. Delaware was the gold standard for startups incorporating in the U.S. And for good reason:
- Clear legal precedents: Decades of established case law provide predictability.
- A specialized Chancery Court for business cases: Judges with deep expertise in corporate law.
- Broad investor familiarity and trust: Top accelerators like Y Combinator still require a Delaware C-Corp for investment.
At Lazo, we've helped hundreds of startups navigate incorporation, fundraising, and cross-border expansion. While Delaware remains the preferred choice for most, we're seeing some founders explore alternatives like Nevada, Wyoming, or even offshore structures. It all depends on their business model and risk appetite.
⚠️ There is No Mass Migration (Yet)
Let's be clear: there is no definitive migration away from Delaware. Most U.S. investors still expect — and in many cases require — a Delaware C-Corp structure. Delaware's regulatory framework is mature, predictable, and founder-tested, which is why it continues to be the standard.
However, recent discussions have sparked questions:
- Unpredictable court rulings: Some perceive recent decisions from the Delaware Chancery Court as less predictable, particularly in tech-related cases.
- Increased litigation risk: Concerns about higher litigation risks for boards and executives.
- Demand for protective governance: A rising call for more protective legal frameworks.
💡 Enter Nevada: A New Contender?
Nevada has adopted a different approach, introducing features tailored to today's founder reality:
- Codified Business Judgment Rule: Nevada has codified the "business judgment rule" into its statutes, offering stronger protection for leadership and boards. In Delaware, this rule is largely judicial precedent, which can be modified over time.
- Waiver of Jury Trials: Nevada allows for the possibility of waiving jury trials in civil disputes, potentially leading to less legal uncertainty and faster resolutions.
- Reforms for Specialized Commercial Judges: Nevada is proposing constitutional amendments for commercial judges to be appointed by the governor, enhancing judicial specialization.
- Tougher Standards for Shareholder Lawsuits: Nevada demands clearer proof of misconduct for directors and executives to be held liable, potentially reducing frivolous litigation.
- Real Confidentiality Protections: Nevada offers stricter confidentiality rules regarding corporate records, which can be a draw for founders seeking corporate privacy.
🤔 What About Other Options?
While Delaware continues to be the default for most venture-backed startups, other jurisdictions might make sense in specific situations:
- 🌍 Web3 projects or global DAOs? Wyoming or offshore structures might align better with your governance model and distributed nature.
- 🏝️ Operating in a single U.S. state? Florida or Texas LLCs can simplify compliance and avoid complications related to foreign qualification in multiple states.
- 🔒 Need strong corporate privacy protections? Nevada and Wyoming offer stricter confidentiality rules for stakeholders.
✨ The Takeaway: Align Your Structure with Your Goals
The goal isn't to follow the trend. It's to choose the legal structure that supports your growth, protects your leadership, and keeps your team focused on scaling, not fighting lawsuits.
Making the right choice for your startup's incorporation is crucial. It impacts everything from fundraising to tax obligations and long-term compliance.
🚀 Ready to Build Your Legal Stack with Confidence?
Choosing the right jurisdiction for your startup can feel overwhelming, but you don't have to navigate it alone. At Lazo, our experts specialize in helping founders like you build a solid legal foundation for your U.S. and cross-border operations.
Don't let legal complexities slow you down. Our team can help you:
- Incorporate your startup seamlessly.
- Ensure full compliance with U.S. regulations.
- Set up your bank account and manage payroll.
- Scale your business with confidence.
