We’re in the middle of setting up our company and based on what we’ve learned so far, I’d suggest that if you’re establishing a DE C-corp, you do it with a dedicated attorney whom you trust rather than with online templates (Clerky, Stripe Atlas, etc.)
The templates struggle with nuances (employee pools, acceler. vesting, etc.). The templates will also give you only a snapshot-in-time service, while you will need to keep things chugging in the long-run to remain in good standing. Alternatively, you can ask your lawyer to review the templates, if that saves her/him time and costs you less, but using the templates instead of lawyers makes for a bad recipe.
Incorporation templates feel like outsourcing your core engineering function - they might get you going now, but in the long-run you will struggle. Even if your attorney charges $400+/hr, you’d only save about $1k-$2k, which is not worth it when so much is at stake.
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Related to this- in your experiences or opinions, what is a good ballpark estimate for working with a proper lawyer to establish a DE c corp? We need to convert our llc and the suggested lawyers want between 10-30k. We’re very early stage. TIA
3k
We incorporated with Atlas, before the payment, there were documentations like vesting etc which we printed off and sent to our lawyer.
Then we paid $250 (MS founder’s hub already gave us 50% discount). The documentation can be altered to your taste by your lawyer afterwards, Atlas also filed our 83b which took off the load from us.
In essence, if you would use Atlas, make sure to have your lawyer edit all the templates given to suit your company goals.
A lot of the automation software out there are overtemplatized. Having a trusted attorney in the loop – even for a five-minute high-level checking to make sure everything’s looking good – is definitely a good idea.
If you’re set up is plain vanilla, Stripe Atlas and Clerky are excellent. If you have nuances involved, definitely get an attorney on board. Properly setting up a Delaware c-corp should cost no more than $2k-$3k; in fact, a lot of attorneys will do it for a flat fee, so you don’t have to worry about the billable hour.
My advice is too go the cheaper route of using a Clerky or Atlas and then spend the money to tidy it up later. Maybe you could pay a lawyer $5k now vs $30k later for the clean up but the value of the money and time required changes drastically.
Spending $5k when I started my business would literally be months of expenses. Spending $30k now still sucks but capital is much cheaper now, maybe 1/3rd of our expenses for the month.
I think that doing this is risky and precisely what people should try to avoid if they could. The reason is because the devil is in the details: i.e. adopting a stock plan at incorporation and prior to a SAFE means the founders eat the dilution. I wouldn’t have known without our attorney.
If people are trying to save cash, I’d say a compromise is start with a template but then run it by your attorney. Otherwise, you’re playing with fire.