If you are going to raise capital for your startup then you are going to need to legally incorporate your company. There are a bunch of other things you are going to need to beyond becoming a legal entity. You need to manage a cap table, set up a banking account to handle the receipt of investor capital, and more. All of these startup formation activities use to take up a ton of time and energy.
I can remember when we were incorporating GoGrabLunch, my very first startup. Although we worked with a fantastic attorney, who also cut as a deal on pricing, the process of forming the company was a real pain. What was even more difficult was managing the company, from a legal perspective, after the formation was complete. I was the one dealing with all that administration. So, I know how painful it can be.
In classic entrepreneur mantra, where there is a solution for a pain point there is a business.
In today’s startup ecosystem there are all kinds of companies that specialize in providing services to startups. These startups serving startups focus on making the process of managing a startup easier. Among them are companies that help with the startup formation process.
Today I want to share with you a few of the resources I have found that provide this type of service. Not only can they help you save time but they can also save you money when compared to outright hiring an attorney to handle the same functions.
AngelList is a company whose original purpose was to help startup founders promote their business and connect with investors. All of which occurred virtually. Since their target audience is startup founders it makes sense for the company to have moved into the startup formation vertical.
That AngelList Stack suite offers incorporation (as a Delaware-based C corp; Delaware is a favorite because of its favorable business laws and taxation), a banking account where you can house the investment dollars you receive, management of your cap table that includes keeping it up-to-date as shareholders change, data rooms (this is where you store the information about your startup that your investors can access and do due diligence through).
It also includes human resources management such as hiring and payroll.
All of that for only $500.
What I like about AngelList Stack is that it is part of the AngelList overall offering. The companies that follow provide similar solutions but they don’t have the same history as AngelList when it comes to connecting startup founders to investors.
Clerky focuses exclusively on the startup formation and management process. So, unlike AngelList, there is not an founder/investor network component.
Still, the company appears to offer a nice product.
Their solution includes fundraising assistance in the form of cap table management, valuations, human resources components, preparation of non-disclosure agreements, and management of officers/directors overseeing the startup.
According to their website a few well-known startups have used their services. Including Coinbase, Zapier, and CodeAcademy.
Clerky offers a lifetime, one-time fee structure of $799. As well as a pay per use offering for just the incorporation piece at the price tag of $407. I recommend spending the extra $400 or so dollars.
Whereas I had heard of the first two companies prior to doing this research through my investor network, the next company is one I had not heard of before.
Gust Launch is an offering from Gust. Their main offering is very similar to AngelList in that they promote connecting startup founders to investors. According to their website they have over 800k founders and 85k investors as part of their network.
Their startup formation product offers much of the same as the previously mentioned companies. The main difference I saw was in the pricing structure. Whereas AngelList and Clerky offer a one-time fee, Gust’s Launch pricing is multi-tier. Starting at $300 per year and ending at $1k per year. in order to get anything close to what the others offer you will need to pay the $1k per year price tag.
One-piece they did market that stood out was access to all kinds of credits. That includes Amazon Web Services (AWS) credits and discounts to some of the other companies that have raised capital using their platform, such as SendGrind and, more notably, Hubspot.
Candidly, I have not used any of the three mentioned services. So, I can’t speak to the value they offer, the support they provide, etc. I haven’t needed to do any startup formation work in a few years now. Maybe I am do?
But, if I were going to go one one provider I would choose AngelList because of the built-in founder/investor network that exists. I’m sure a founder could work with Clerky and still leverage the AngelList network. I just like the idea of having everything in one place. I have to imagine there has to be some good integration benefits from that kind of approach.