Hypothetical question
follow-up. dallas family office wants to lead a $1.2M priced round. we're a Texas LLC. their lawyers said i need to convert to DE C-corp before they'll close. how complicated is that?
follow-up. dallas family office wants to lead a $1.2M priced round. we're a Texas LLC. their lawyers said i need to convert to DE C-corp before they'll close. how complicated is that?
statutory conversion (TX LLC -> DE C) is the cleanest path. file in TX to convert to foreign-domiciled, then file in DE for new C-corp. two filings, $500-1500 in state fees, plus operating agreement to bylaws + stock plan setup.
budget 4-6 weeks and $5-10k in legal fees. investors will want this done before closing.
some firms (clerky, stripe atlas) will handle the conversion as part of their package. atlas is around $500. clerky is around $1500. way cheaper than full law firm.
VCs almost always require Delaware C-corp for institutional rounds. Statutory conversion preserves your existing operating history (no asset transfer, no change in tax basis) and is straightforward.
Steps: (1) draft plan of conversion + new DE COI, (2) member/manager approval of conversion, (3) file conversion docs in TX and DE, (4) update EINs/bank/contracts, (5) issue founder stock to current LLC members, (6) adopt new bylaws + stock plan, (7) initial 83(b) elections within 30 days of stock issuance. Whole package can be done in 3-4 weeks. Informational only.