For Washington-Based Startups, Where To Incorporate–Delaware or Washington?

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Washington vs. Delaware

If I was a Washington-based startup company anticipating potentially raising angel or venture capital financing, where would I incorporate–Delaware or Washington?

I would incorporate in Washington for the following reasons:

• In this lawyer’s opinion, Washington law is just as good as Delaware law. Washington doesn’t have Chancery Courts (special courts dedicated to handling just corporate disputes), and Washington doesn’t have a long line of judicial precedent, but for a startup I don’t see this as a big deal. Washington courts regularly look to Delaware precedent for persuasive opinion when appropriate. There are nuanced differences between the two state’s laws, but they are substantially similar.

• Washington, unlike California, is not a review state. If your were in California and trying to decide where to incorporate, California or Delaware, you would choose Delaware to avoid the practice of the California Secretary of State of reviewing and approving filings before they are effective (which can slow down a financing). Washington, like Delaware, is not a state which reviews filings with the Secretary of State before they are effective....

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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