The Startup Checklist

Appendix CStarting a U.S. Corporation from a Foreign Country

MANY OF THE discussions in this book pertaining to incorporation, stock option plans, term sheets, and exits relate specifically to U.S. companies. The United States has a long history of supporting entrepreneurship, stable corporate law, and a robust ecosystem of investors who fund scalable, high-growth companies. Indeed, each year more than $50 billion is invested by American business angels and venture capitalists into early stage businesses.

Because the United States has such a standardized structure for early stage investments (relatively speaking), because U.S. investors are familiar with it, and because there are so many local opportunities for early stage investments (over 700,000 incorporated employer businesses are founded each year in the United States), most American business angels and venture funds invest primarily domestically. For them, the challenges of making international seed investments are typically not worth the trouble and unfamiliarity of dealing in another country.

For that reason, many international founders who are interested in approaching the U.S. investor market have begun to consider incorporating their venture in the United States and then operating the business in their home country as a subsidiary of the U.S. parent. This makes it just as easy for American investors as it would be if the firm had been a domestic company formed by an American citizen.

What's interesting is that it ...