Europe · Foreign Cofounder

Anyone had Europe and U.S. Cofounders? How did you structure it?

kraig Into ICOs, fintech and saas

February 25th, 2017

Just curious. As you know you can't offer Europe investements in the USA and I believe the reverse is true.

So is there anyone that's done this and how do you structure everything? To avoid hybrid entity mismatch and the like?

Fred Davis Helps startups start up. Mentor: UploadVR & Runway

Last updated on February 27th, 2017

You should structure your startup as a Delaware C corporation. You should hire a lawyer to do it but if you can't you should use Legalzoom. Almost every successful startup, and most Fortune 500 companies are Delaware C corps.

Use the Assumed Par Value Capital Method to calculate taxes (NOT the Authorized Shares method!) and your tax bill will probably be the minimum tax of $350 since startups don't usually have many assets.

You should authorize 10M shares, and issue 5M shares. Then you split up the 5M shares, etc. using whatever splits you want.

I suggest having founders vest into their shares over time so if a founder leaves early on you don't have someone who is no longer providing value to the company owning a significant number of shares. If this happens, investors don't like it, so you need to figure out how to avoid that at all costs.

The founder(s) in Europe then own shares in a Delaware C corp., just as they would if they bought shares from a stockbroker in a Fortune 500 company or any other company. If you want to be able to get big US investors and potentially go public then you shouldn't be a foreign corporation.

Lester de Souza Building community for entrepreneurs

February 25th, 2017

Not sure what your question is Kraig! Since you mention investments, you may want to clarify what you are referring to. Are you equating Cofounder with investor? Also, your question suggests a singular entity but does not indicate where the investment is supposed to be.

Roger Brown International Business Leader, Technology, Oil and Gas

February 27th, 2017

I am confused regarding your basic premise that you can't offer European investments in the USA and visa versa ?

My experience is that premise is incorrect. Either founders or venture capitalist are free to invest wherever they want in the global economy as long as the legal jurisdiction does not prohibit such. The EU is a very open market economy. As is the USA. Both jurisdictions allow for and encourage global participation.

Please clarify your "pain point" ?