In this interview with Jeremy Glaser, who is a partner at the law firm Mintz Levin and also serves as Co-Chair of the firm’s Venture Capital & Emerging Companies Practice, we discuss the benefit of flow through of losses of your startup to investors in a LLC, until you raise institutional financing, at which time you can easily convert to a C Corp.
“The LLC gives you the benefit of that flow-through of losses. As we all know, startup companies usually have losses in the early years. Rather than having those losses locked up in the corporation where they may or may not be useful, you get to have those losses go to the benefit of your investors, which can be viewed as a real benefit for the early-stage investors. You operate as an LLC until you bring in institutional financing, at which point, with a very simple filing, you then convert to a corporation.”
For more strategic insights on startups, visit questfusion.com.
This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.