Tom McGinn, General Counsel at Northzone & Réna Kakon, General Partner at Kara Ventures
EUVC Academy · 57m · Fund Strategy, Legal & Structuring
Incorporation is one of the earliest decisions founders make, yet it directly shapes tax exposure, fundraising ability and exit outcomes. Done wrong, it can create costly and irreversible problems later.
This session breaks down how to approach incorporation decisions with a clear framework rather than defaulting to familiar options like Delaware. It covers how different jurisdictions compare, what factors actually matter and how to align structure with your company’s reality. It also highlights common pitfalls, from tax traps to failed flips and how to avoid them early.
Key Learning Points
Why incorporation decisions matter early
Early incorporation choices can create material tax exposure even without operational presence
Jurisdiction can trigger significant tax liabilities at exit, even without local operations
Founders often deprioritise legal and incorporation decisions early on
Why defaulting to Delaware can be misleading
Delaware is easy and standardised, but not always aligned with founder context or strategy
Incorporating in the US can create tax obligations even without US activity
Investor requests to incorporate in Delaware are often driven by familiarity rather than necessity
Common structuring mistakes and their consequences
Holding shares personally can create tax liabilities on a sale, even without proceeds
Cross-border setups can create issues due to conflicting rules across jurisdictions
Early structuring decisions can block transactions or require complex restructuring later
How to approach incorporation decisions systematically
Decisions should combine jurisdiction-level factors with company-specific context
Key inputs include founder tax residency, team location and target market
Flips are often investor-driven and may not reflect the company’s optimal structure
