As a EU citizen, I opened a company in Delaware. Here's why. (And how)

Summary

In this video, Tomas from Slovenia shares the unexpected success of raising $300,000 for his high-end router project, including a significant investment from a UK-based company. He explains the strategic decision to incorporate in Delaware for legal and tax benefits, despite misconceptions about tax havens. Tomas details the incorporation process, the importance of legal documents, and the involvement of an accountant for tax compliance, aiming to have the first router prototypes by mid-2024.

Takeaways

• 😀 The speaker initially announced a $200,000 funding round but later revealed they actually raised $300,000 for their custom high-end router project.
• 📧 A significant investment came from a UK-based individual named Mike, who expressed interest in the project and eventually invested £100,000 Sterling.
• ✈️ Mike and his CFO visited the speaker in Slovenia, leading to a successful meeting and the signing of a safe agreement within 14 days.
• 🌍 The speaker, Tomas, is from Slovenia and is developing a high-end router with a team that includes a co-founder in Eindhoven, Netherlands, and multiple investors.
• 🏢 The company, Mono Technologies Incorporated, chose to incorporate in Delaware for its business-friendly legal environment, not primarily for tax benefits.
• 🤔 Tomas dismissed the idea that incorporating in Delaware was solely for tax haven purposes, emphasizing the legal simplicity and benefits of doing so.
• 📝 The process of incorporating in the US was described as straightforward, requiring less physical presence and offering more flexibility in share issuance compared to European regulations.
• 📈 The company's main activity is the development of networking equipment, and the incorporation process was completed with the help of a US-based attorney team.
• 📑 Key documents for incorporation included the Articles of Incorporation, Bylaws, Shareholders Agreement, and various IRS forms, such as the SS-4 for an EIN.
• 💼 The company also engaged an accountant to handle financial matters and to file a Section 83(b) election for tax purposes on stock issuance.
• 💰 The entire incorporation process took approximately three months and cost around $7,000, with the newly incorporated company footing the bill.

Q & A

How much money was initially announced to be raised for the high-end router project?

Initially, it was announced that almost $200,000 was raised for the high-end router project.

What was the actual amount raised for the high-end router project?

The actual amount raised was $300,000.

Who was Mike and what was his role in the project?

Mike was a representative of a UK-based company who expressed interest in investing in the router project, offering to initially invest £100,000 Sterling.

Why was the name changed from Mike to a pseudonym in the script?

The name was changed to a pseudonym for privacy reasons.

What was the reason for choosing Delaware for incorporation?

Delaware was chosen for incorporation due to its favorable legal environment for businesses, including the ease of setting up a company and the legal knowhow available.

What is the name of the newly incorporated company?

The newly incorporated company is called Mono Technologies Incorporated.

What is the role of a registered agent in the context of incorporating a company in Delaware?

A registered agent is responsible for managing legal documents and government correspondence to ensure compliance with state regulations.

What is an EIN and why is it important for the company?

An EIN, or Employer Identification Number, is the company's tax number. It is important because without it, the company cannot open a bank account, which is necessary for investors to wire money.