Questions

I developed a web application prototype (with 70% functionality) and validated it with some potential customers. I've around 2-3 investors who are willing to invest to take the application to the next level (complete the remaining 30%, go to market, etc). So should I register a C-Corp and issues shares to them OR should I make them part of the company as co-founders? FYI, they will invest money and I've to take care of the execution.

If they are truly just investors and not contributing as founders I would suggest structuring it as an investment. This does mean registering as a corporation. Registering your company is not all that difficult to do on your own.

If your concerned about the legal fees associated with properly setting up investors I would suggest checking out a SAFE (simple agreement for future equity). The SAFE is investment tool developed by Y Combinator, you can find more info at https://www.ycombinator.com/documents/#safe

As a disclaimer, it's always a good thing to speak with a Corporate Attorney before making any agreements or taking on investments.


Answered 4 years ago

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