Now that we are fully incorporated and started to receive some money on our bank account, it’s time to debrief and review the experience we had incorporating our company with Stripe Atlas.
TL;DR: it was great.
As a reminder, Stripe Atlas is a service that helps you start a global business from absolutely anywhere on the planet. For only $500, and in timely fashion, they incorporate your company in the USA (Delaware, for obvious reasons), they help you open a Silicon Valley Bank account and the Stripe account linked to it. Other perks include $15,000 of AWS Promotional Credits (via AWS Activate) and free (but limited) advising from Orrick and PwC.
When some people (mainly friends and family) became interested in what we were building and wanted to invest some money to help us, we had the obligation to start a legal entity to be able to accept these funds.
Our most serious options were to establish our business in Belgium (as most of the founders are located there) or in the USA. At this point, we applied for Stripe Atlas, without really knowing if (and when) we would be selected.
The main advantages to establish a business in the USA is to become a global company. As our business is 100% SaaS with potential customers everywhere on the globe, that makes a lot of sense for us.
Also, if you’re really serious and ambitious about your business (as I think you should be), having an American company can be a big advantage if you want to raise money with a top US investor at some point. Investors are generally not looking for reasons to invest in your business, but for reasons not to invest in your business. For an American investor, not being an American company (and especially not a Delaware one) can be a very good reason to eliminate you without even looking at what you’re doing.
On the other hand, dealing with foreign and unknown laws and regulations can be intimidating, and the USA is not known to be a country where starters receive a lot of financial assistance from the government (which is something very common in Belgium and in the rest of Europe).
Looking back, these two subjects were not such big issues after all. Dealing with the American law is not that troublesome because you can find almost everything you’re looking for online. Counsellors we had the chance to talk with thanks to Stripe Atlas were very helpful as well.
You also realize that you don’t really need public financial help if you don’t get robbed to begin with. To create a SPRL/BVBA in Belgium, the capital must be fully subscribed at the time the company is incorporated, to the amount of €18,550 (of which €6,200 must actually be paid up in the account of the SPRL/BVBA). Also, the articles of association must be written before a notary. You need to be physically present in the office of a random guy you never met and will never meet again to make sure that your company can be incorporated.
Can someone please explain me why this profession still exists and why it’s useful?
Now compare all this to the $500 required by Stripe Atlas, with no questions asked, and you understand why we jumped in the Stripe Atlas train as soon as we got accepted.
Our company is based in Delaware but we might never go there for our entire life.
The entire process took about two weeks and was concluded by the reception of our EIN at the end of December. It would have probably taken less than 10 days if we weren’t so slow to read, discuss and sign all the legal documents they handed us (it was during the holidays and we were all very busy eating and drinking).
In hindsight, we should actually have waited a little longer before submitting the signed documents because we had to pay $400 in taxes for the entire year even though our company existed for only a few days in 2016.
Apart from that mistake that we could have easily avoided, everything was super smooth, with emails received at each step of the process, friendly discussions with the Stripe staff, and documents that we could seamlessly sign electronically with DocuSign or HelloSign.
Yes, we are in 2020, no need to print/sign/scan anymore.
After that, we were introduced to a lawyer on UpCounsel and had to pay an extra $250 for a Stripe Atlas post-incorporation package. We had to decide how many total shares our company would have, how many each founder would have, how much time we would vest, what would be the vesting cliff date and how our vesting would accelerate in case of a triggering event (like the acquisition of our company).
$250 is very cheap for putting all these things on official paper. As a comparison, we were asked about €1,500 for something similar in Belgium.
To be able to receive money from our investors, the last step of our process was to write convertible note contracts. A convertible note is a short-term debt that converts into equity. Investors loan money to a startup as its first round of funding and rather than get their money back with interest, they receive shares of the company after the first round of funding (typically a seed or a Series A round).
We decided to go for an improved form of convertible notes called SAFE because they are more entrepreneur-friendly while still being as good as the old thing for the investors. We mainly had to decide what would be the valuation cap and the discount for our super early investors and that was it, we were ready to roll!
As a conclusion, I would say that Stripe Atlas was a great facilitator and I recommend it to anyone without a shadow of a doubt. It was super useful to have their support while doing all these things that are very unfamiliar for us simple citizens with zero legal or financial experience. It helped us focus on our main mission which is to build an amazing product that people want to use and pay for.
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