How to Incorporate on a Budget For Your First Pre-Seed Round

Starting your first startup can be an exciting adventure, but it can also feel overwhelming, especially when you're trying to incorporate and raise a round on a tight budget.

The good news? You can do it with minimal costs and without the need for an army of lawyers. Here’s a simple guide to help you get started.

Step 1: Set Up a Delaware C-Corp

When it comes to building a startup that investors trust, setting up a Delaware C-Corp is often the best way to go. Delaware's corporate laws are business-friendly and preferred by major investors and accelerators like Y Combinator. The great thing is that you don't need to be a U.S. citizen to incorporate in Delaware.

You can easily set up your Delaware C-Corp using Stripe Atlas. For $500, Stripe Atlas not only helps you with the incorporation process but also gives you access to discounts on essential tools that can help you run your startup more efficiently. This package makes it easier to hit the ground running without needing to worry about expensive legal fees.

Step 2: Build Your Pitch Deck and Investor Shortlist

Your pitch deck is the first impression you'll make on potential investors, so take the time to craft a compelling one. Focus on clearly communicating your vision, market opportunity, product, and business model.

Once your pitch deck is ready, it's time to find the right investors. This is where PitchList comes in. PitchList is a toolkit that helps you build a tailored shortlist of investors who are likely to be interested in your startup. You can also get contact information to reach out to them directly.

After you've built your shortlist, share it with friends or acquaintances who might be able to introduce you to someone on the list. Warm intros are often more effective in securing meetings with investors. However, if you don't have a direct connection, don’t hesitate to send a personalized email. A well-crafted, thoughtful message can open doors.

Step 3: Issue YC SAFEs

When you're ready to bring investors on board, you'll need to issue investment documents. For most pre-seed rounds, the YC SAFE (Simple Agreement for Future Equity) is a popular choice. This standard document is widely recognized by investors and is designed to make fundraising simpler for startups.

The SAFE is particularly advantageous because it defers valuation discussions to a later date, allowing you to close deals quickly. You can issue SAFEs without needing a lawyer, as they are designed to be straightforward. However, it's always wise to ensure you fully understand the terms before proceeding.

Final Thoughts

Every startup journey is unique, and while these steps work for many, it's important to consider your specific situation. Getting advice from professionals, especially when it comes to legal and financial matters, can save you from potential headaches down the line.

Setting up your first pre-seed round on a budget is entirely doable with the right tools and a bit of determination. Keep pushing forward, and you'll be one step closer to bringing your vision to life.

If you need help finding the right investors, building your shortlist, or closing your funding round, PitchList is here to support you every step of the way.