By Rajeev Behera, CEO of Every
Most founders spend their time thinking about product-market fit and customer acquisition strategies. But there’s a critical foundation that often gets overlooked: the legal structure of your company. Get this wrong, and you might find yourself unable to raise capital, regardless of your startup’s potential.
Having raised over $130M across multiple companies — first with Reflektive (acquired) and now with Every — I’ve seen how early incorporation decisions can significantly impact a startup’s ability to raise capital. The process isn’t particularly complex, but it requires attention to specific details that many first-time founders miss.
Leave your job first
You must leave your current position before incorporating your new startup. The primary reason is intellectual property rights — most employment contracts have broad IP assignment clauses that could give your employer claims to your startup’s IP. While there may be legal workarounds to this situation, they require careful navigation with an experienced startup attorney. It is very risky to try to figure this out on your own. For most founders, the decision to leave and incorporate a startup typically arrives at one of two critical moments: either when you’ve secured your first customer, or when an investor expresses serious interest. These triggers often provide the concrete validation needed to leave your former career behind and make the leap to being a founder.
Incorporate in Delaware as a C-Corp
VCs and angel investors will only invest in Delaware C-Corporations. Period. Try to pitch them an LLC or a corporation registered in another state, and you’ll likely get a hard pass before they even look at your business metrics.
Why? C-Corporations provide the standard share issuance and governance structure that investors require. And Delaware isn’t just another state choice — it’s the gold standard, offering investor-friendly tax laws, robust legal protections, and clear corporate governance guidelines that VCs understand inside and out. Nearly half of all publicly traded companies in the U.S. are incorporated in Delaware for good reason.
While you can technically restructure your company later, it’s an expensive and time-consuming process that can derail funding rounds. Starting with a Delaware C-Corp from day one removes this potential roadblock.
Structure your stock to maximize your returns
Let’s talk about structuring your founder shares strategically. While there are certain terms investors won’t budge on — like a 4-year vesting schedule with a 1-year cliff — there’s room to optimize the structure in your favor.
Here’s a founder-friendly move that most investors will be ok with: the double trigger acceleration clause. This provision accelerates your vesting if two things happen: your company gets acquired, and you’re terminated. Without this protection, you could find yourself pushed out with a significant portion of your equity still unvested. With it, you maintain leverage in acquisition scenarios and protect your upside. Smart investors understand and accept this term, so don’t leave it on the table.
Use incorporation docs that are built for tech startups
A costly mistake I often see founders make: using incorporation documents with generic instead of startup-specific verbiage. When investors conduct due diligence, they’ll expect to see startup-specific clauses in your incorporation documents. If your paperwork doesn’t match what they’re used to, you’ll end up spending thousands in legal fees to restructure everything.
At Every, we’ve built our incorporation documents specifically for this purpose — setting up your company to be investible while maximizing founder returns. Like everything else we do, these documents have been crafted based on our experience operating multiple tech startups. We handle all the setup work to ensure your documentation matches exactly what tech investors expect to see.
Get Started with Every.io and incorporate your startup correctly for $0.
