There are good reasons to incorporate in US states like Delaware, it is not coincidence that so many (non-YC) tech companies are incorporated there. Note that you incorporate in US states, not in "the US", and states offer very different jurisdictions. Here is a quick explanation of why selection of corporate jurisdiction is important:
1) You want to select a jurisdiction that has clean, flexible, and stable set of corporate laws that have already been through judicial review. This provides a robust foundation for corporate structure with few legal unknowns or political risks.
2) Important for investors, the corporate laws must be fair to all parties involved. For example, a jurisdiction with corporate laws that allow a minority shareholder or employee to screw the majority shareholders or hold the company hostage is bad and greatly increases investor risk. There are many jurisdictions that are like this, even in the US. It is one of the reasons you never see tech companies incorporated in California, for example, even though Silicon Valley is there.
3) A jurisdiction that operates under English Common Law is convenient because it is the common basis of contract law used in business, particularly if it involves parties in multiple jurisdictions. Delaware is a nice example of such a jurisdiction with a long, sane, and mature judicial history.
Jurisdictions like Delaware are among the very best in the world for everyone involved if you are building an investor-backed business. Startups that are not incorporated there often have to reincorporate in a place like Delaware as a condition of investment. It is all about having a stable, scalable, and fair set of legal rules on which to build the company.
The average startup faces much more risk from being in a poor jurisdiction than whatever risk you perceive from being incorporated in the US. Investors know this and proper jurisdiction selection is an inexpensive way of reducing the total risk to startup success.
Lots of very very good reasons for Delaware, yes. It totally makes sense for yc to have this as a rigid rule.. Still I'm interested to know if they have ever made an exception for anyone, and if so who and why.
1) You want to select a jurisdiction that has clean, flexible, and stable set of corporate laws that have already been through judicial review. This provides a robust foundation for corporate structure with few legal unknowns or political risks.
2) Important for investors, the corporate laws must be fair to all parties involved. For example, a jurisdiction with corporate laws that allow a minority shareholder or employee to screw the majority shareholders or hold the company hostage is bad and greatly increases investor risk. There are many jurisdictions that are like this, even in the US. It is one of the reasons you never see tech companies incorporated in California, for example, even though Silicon Valley is there.
3) A jurisdiction that operates under English Common Law is convenient because it is the common basis of contract law used in business, particularly if it involves parties in multiple jurisdictions. Delaware is a nice example of such a jurisdiction with a long, sane, and mature judicial history.
Jurisdictions like Delaware are among the very best in the world for everyone involved if you are building an investor-backed business. Startups that are not incorporated there often have to reincorporate in a place like Delaware as a condition of investment. It is all about having a stable, scalable, and fair set of legal rules on which to build the company.
The average startup faces much more risk from being in a poor jurisdiction than whatever risk you perceive from being incorporated in the US. Investors know this and proper jurisdiction selection is an inexpensive way of reducing the total risk to startup success.