A Stack for Startups
Creating a new company can be an arduous and frustrating process. If you haven’t founded a company before, the choices feel endless and complicated. Luckily, lots of services and tools are available that can make this process much less painful.
The first question when creating a US-based startup is usually LLC versus C-corporation. There’s already plenty of material out there written by people much smarter than me, but I’ll summarize our decision by claiming that, if you’re planning on seeking angel investment or venture capital, the de facto standard is a Delaware-incorporated C-corp. Delaware has risen to popularity because of its business-friendly laws, but more importantly, those laws are well-understood by investors. As for managing equity and issuing shares, everything is much, much easier with a C-corp than with an LLC. The downside, however, is that C-corps are more expensive to set up (hundreds of dollars more if you use an online service, thousands more if you use a law firm), and you’ll still have to pay fees for your business in the state you’re operating out of.
There’s no substitute for working with a good lawyer, of course, but you can get pretty far on your own. Some services, like Clerky which is mentioned below, will even put you in contact with a lawyer to answer basic questions. Below, I’ve summarized the tools and services we used when setting up DM for success.
- Clerky — A fantastic product that makes the creation of a Delaware C-corporation a reasonable process. Additionally, Clerky offers essential documents such as NDAs, PIIAs, contracting agreements, SAFE fundraising, promissory notes, excellent support — — and it’s all included in a single lifetime package. We also considered Stripe Atlas, but we preferred the fact that Clerky was designed with C-corps from the beginning (and are currently testing LLCs), while Stripe Atlas was designed with LLCs from the beginning (and only recently added C-corps). I’ve been told that the startup accelerator Y Combinator sends most new startups through Clerky, which in fact went through the YC program. So we went with the platform with the most experience, and we’ve been extremely impressed.
- Virtual Post Mail — A virtual postal address is essential when more people than ever are working remotely, either from their homes or while being a “digital nomad” across locations around the globe. Virtual Post Mail is a fantastic service that lets you receive physical mail, which they will fully scan or ship to you at your request. UPS and USPS can also be used, but their offerings tend to be expensive and can require physical access. VPM is also a registered agent in a handful of US states so they can be listed as your place of business on most legal and incorporation forms.
- Silicon Valley Bank — A long time institution in the SF Bay Area, SVB is a founder-friendly bank that makes setting up business services easy. SVB’s new SVB Go platform is a streamlined banking and payments platform just for founders that works great on desktop and mobile. SVB Go will also issue you credit cards if you need them, too. SVB combines the functionality of a modern banking platform with the experience of an established bank, and their customer support has been fantastic.
- Brex — Brex started as a founder-oriented credit card but has expanded into being a bank as well. You might then ask, why do we have both SVB and Brex? Brex has a better platform for physical and virtual credit card provisioning, and it’s better at receipt management by letting me forward receipts to an email address for automatic scanning or take pictures with my mobile phone (at least back when coffee meetings were a thing). I’ve heard positive things about their banking offering, but we chose to use SVB for most of our banking since Brex’s offering still feels “new” and we didn’t want any surprises.
- Google Workspace — Google still offers the best all-in-one suite for corporate email, documents, spreadsheets, calendering, and videoconferencing. It just works, and once it’s set up you can mostly forget about it.
- Gusto — HR as a service. Gusto makes adding employees and contractors simple, handles payments and payroll, and it helps you breeze through all of the work you need to stay compliant. If you’re not employing anyone, Gusto probably isn’t necessary from the start of the company, but as soon as you start paying people in the US it becomes essential. (Make sure to ask a friend that’s using Gusto for a discount code!)
If you’re thinking of starting a company, hopefully this list will be helpful. If you have questions or want to be notified of future posts, make sure to sign up and join this community!
This post was originally posted on DM.