In every single tech ecosystem in the country, whether it’s New York, California, Texas, Washington, etc., the vast majority of startups intending to raise angel and venture capital incorporate as Delaware corporations. The reason for this is simple: Delaware is the “english language” of corporate law in America.
Having to learn 50 different sets of laws can be incredibly inefficient and cumbersome for investors, lawyers, and other professionals intending to do business on a national level. For that reason, Delaware has emerged as the standard place to incorporate any serious tech company intending to operate beyond a specific city. All the serious corporate lawyers around the country know Delaware law, all the experienced investors are familiar with it, and the dominant template forms used for raising venture capital rounds assume a Delaware corporate law background; thus Delaware has leveraged its “network effects” to become the standard.
This does not mean that New York law is not relevant at all for NYC startups. You will still have to register the company in New York (as a foreign entity), pay state franchise taxes, and work within New York labor laws for New York-based employees, but as it relates to the corporate law governing the company’s relationship with its stockholders and board of directors, the Delaware General Corporation Law (DGCL) will be the foundational set of rules for an NYC-based tech startup.
